If that's the case, then it probably won't work in "Safe Mode". Try using a standard PS2 mouse when in "Safe Mode". You should be able to access System Restore from Safe Mode then.

I would sure help if we knew which operating system you're using. XP or ME?

The Ptsnoop.exe program is probably the one which is related to your dial-up modem. If you can click on "Start-Run, type "msconfig", then click on the "start up" tab. If "Ptsnoop.exe" is listed there, try UNCHECKING it, then restart the computer into "normal" Windows.

Hope this helps.