I have found a solution that makes the mouse and USB work properly again
in Karmic, by disabling "USB Legacy support" in the machine's BIOS
setup...
*-core
description: Motherboard
product: M2NPV-VM
vendor: ASUSTek Computer INC.
*-firmware
description: BIOS
vendor: Phoenix Technologies, LTD
physical id: 0
version: ASUS M2NPV-VM ACPI BIOS Revision 1401 (08/07/2008)
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[Karmic] USB problems and no USB mouse after upgrade from Jaunty
https://bugs.launchpad.net/bugs/494520
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