CORRECTION: Kent West wrote:
gpm.conf's "device=" line needs to point to the real mouse device; gpmdata is only a middle-man between gpm and X. If it's a ps/2 style connector, you probably want it to read "device=psaux". For a generic PS/2 mouse, the "type=" line probably needs to read "type=ps/2" (or "type=imps2" if you have a wheel).
Should be "type=ps2", not "type=ps/2".