I had similar problem.
It was solved once I restored the 
   Section "InputDevice"
in /etc/X11/xorg.conf

[diff lines]:

<       Driver          "vmmouse"
---
>       Driver          "mouse"
>       Option          "CorePointer"
>       Option          "Device"                "/dev/input/mice"
>       Option          "Protocol"              "ImPS/2"
>       Option          "ZAxisMapping"          "4 5"
>       Option          "Emulate3Buttons"       "true"

I did not bother to figure out - which lines exactly were needed fro the
solution.

-- 
Cannot move window or click on xfce menu button on panel
https://bugs.launchpad.net/bugs/196226
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