1. Are you able to test the wireless mouse on another PC or laptop? I know you're pretty certain it's OK, but this would clarify that for sure.
2. Upgrade to SP3.
3. Have you tried a different USB port? Also move from the front to the back (or vice versa).
4. In Device Manager, click on "View -> Show hidden devices". Sometimes this will populate items that were once installed but not currently active (you might also see them in safe mode). Remove any USB devices that you see that aren't currently connected or working.
5. Reinstall the chipset driver for your motherboard.
6. In the BIOS, make sure legacy USB is enabled.
7. If everything else fails, go ahead and try resetting your BIOS settings to their defaults. Also with your Windows XP CD, you can try a repair by following the instructions under
Method 2: Repair install of Windows XP by starting your computer from the Windows XP CD in the following MS article:
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