The logitech mouse driver it can cause that.
More at http://support.microsoft.com/kb/256233 and there is a XP version of the article but I'll let you dig it out.
Hello, I have a PS/2 optical Logitech mouse that works in Linux (Ubuntu 8.04), but not in Windows (XP Pro SP2). It's plugged in when I start the computer, so what's the deal?
I've attempted the following to get it to work:
*Check Device Manager: no yellow or red devices
*Try to use "Add Hardware" - it found nothing
*Tried to use "Add Hardware" manually - no mouse in the selection
Suggestions on getting the thing to work? It's slightly annoying when using some programs to not have a mouse.