If the Mac keyboards can be infected with a virus, I'd say it's within the realm of possibility that MX mice could as well, although I don't know much about them.
What I'd do next is the kitchen sink...
Unplug/remove everything not essential for booting, and don't plug it in to the network. Make sure you're using a PS/2 keyboard (no mouse)
(if possible go to a friend's house or work and re-download Ubuntu and burn it, to make sure you have a clean copy)
Boot to your Ubuntu Live CD, run a complete file system format of the HDD
update/reflash your HDD's firmware if possible
shut down
take the HDD out, update your BIOS again
shut down
clear the CMOS
go into BIOS and disable all onboard peripherals (USB, network, etc)
install windows
install mobo drivers
reinstall XP SP3 (download from a clean machine) to make sure your drivers didn't overwrite any system files with older versions
see if any nastiness exists on the machine at this point -- it shouldn't. set your IE homepage to about:blank. open IE a couple of times, browse the file system and open some readme files or something...
if nothing nasty pops up, then install a decent 3rd party firewall (i use Kerio, but they've been bought and it's no longer free. i can give you a copy of the old, free version i use if you need it -- you're running XP, right? -- or you can download a 30-day free trial of the new one here, which should be just as good:
http://www.sunbeltsoftware.com/home-hom ... -firewall/ ). make sure you download it from a clean machine, of course.
install the firewall, go into the advanced rule creation, and create a rule at the very top of the list that blocks all incoming and outgoing traffic - all ports, all addresses, all apps, etc. i wouldn't use whichever security suite you were using before, since it doesn't have much of a track record for stopping this.
create a rule above that one that allows OUTBOUND communication only, for IE only, on ports 80 and 443 only.
plug in your network cable. the firewall should ask what kind of network it's connected to, so tell it public/untrusted.
go to Windows Update and get all the critical updates available. if you have problems with the updater, you may have to set your firewall to "ask" mode so you can figure out which app needs to be able to talk to microsoft -- or google to find out which ports WindowsUpdate uses -- but only allow OUTBOUND traffic on whatever you add.
Once your machine is patched and up to date, I would use something like Ghost to take an image of it. then begin adding your devices back, but don't install any software or drivers for them without downloading them fresh from a clean machine somewhere else.
if, at any point, the virus rears its head again, you can formate your drive, flash your BIOS, update the CMOS, and re-apply the Ghost image to your drive without having to do all of that work over again. at that point, if the virus came back, then you should have a pretty good idea of which software or device caused it, because it was probably the last one you installed before you had to ghost your machine.
USB 
PS2 adapter powers the mouse but the cursor wont move.
