Silly question...does /dev/mouse exist?
Type this in a terminal window...
#ls /dev/mouse
and see if a valid entry comes back
If not, then you need to re-sym link /dev/mouse to the actual device.
You might also try this link...
http://lists.ethernal.org/cantlug-0208/msg00743.html
It might lead you to at least an idea or two.