For hardware like keyboards/mice, I would use the Windows built in drivers, rather than ones downloaded online which could be unreliable or be the wrong version.
Uninstall the mouse driver and restart. When Windows boots up again, it'll automatically install the correct drivers which are built in.
This should do it.

HP Media Center machine
MOBO: ASUS OEM board
CPU: 2.6 GHz Socket AM2 Athlon X2 5000+
RAM: 2 GB Qimonda PC2-4200 DDR2 RAM
GFX: Sapphire Radeon HD 4850
HDD: Seagate Barracuda 320 GB SATA 7200 RPM