Interesting Dave, what was the last version of DSL that worked for you? Also, did you try to run xsetup.sh and set the mouse to USB? The hardware detection should be exactly the same as DSL4.4.
John: this is another issue that is quite common on the IRC channel as well. most of the time it relates to an ALPS or Synaptics touchpad but i have seen issues with other non-laptop mice as well including the Microsoft 4000 wireless mouse which is suppose to be a standard USB HID device. All the issues i dealt with of this kind where related to DSL 4.10.