Calum, ease up, he's a first-timer.
In response to the original post, I should say this:
Download and burn (burn an image) a Knoppix ISO. Reboot the PC from the newly bootable CD, and see if the system will recognize your mouse and for how long. If this fixes the problem, it may be a problem with your drivers, and I can honestly say that you
need to dump Windows.
Having said that, have you checked your PC for spyware and/or virii lately? This sounds an awful lot like a mundane offshoot of Blaster, somehow. If you haven't, I
highly recommend
SpyBot and
Ad-Aware to scan for current malware infections,
SpywareBlaster AND SpywareGuard to prevent new malware infections, and
BitDefender Free Edition to check for active viral infections (just remember to turn on auto-nightly updates and to setup a nightly/weekly - depending on your Internet usage and security particulars - scan session).