I'm not sure whether the addition of the CorePointer option as shown below will help, but just give it a try. Otherwise try XFree86 -configure to generate a new config file.
Werner > "XFree86 is not able to detect your mouse. > Edit the file and correct the Device. > Section "ServerLayout" > Identifier "Default Layout" > Screen "Default Screen" > InputDevice "Generic Keyboard" > InputDevice "Configured Mouse" "CorePointer" > EndSection -- |=| Werner Heuser = Keplerstr. 11A = D-10589 Berlin = Germany |=| <wehe_AT_mobilix.org> T. 0049 - (0)30 - 349 53 86 |=| http://MobiliX.org UniX on Mobile Systems: HOWTOs,Software |=| http://Xtops.DE Laptops+PDAs pre-installed with UniX |*| This is no time for phony rhetoric -- Lou Reed