Have you tried changing this:
Option "Protocol" "IMPS/2"
To:
Option "Protocol" "Auto"
Or:
Option "Protocol" "usb"
Or possibly:
Option "Protocol" "ExplorerPS/2"
You'll have to restart X for the change to take effect.
Most of my mouse problems have been solved by adding the correct mouse
protocol. Occaisonally, I have to adjust the Z-axis parameter if the
scroll deosn't work at all.
I'm not an authority on this - just sharing some past experiences.
Optical mice are cheap these days, you might consider a new one?
HTH,
Chris
