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Interesting, why wouldnt the USB one work either, im asuming you did remove the PS2 one before putting in the USB mouse. And you removed the PS2 mouse while the computer was OFF. never take it out while on, you can ruin a PS2 port that way.
Now if the reinstall of windows didnt work (It HAS to be a fresh install and not a over the top of a previous install) then you may have to look at the motherboard causing problems with the IRQ used for the mouse.
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