Hmmm, Laptops and I don't really get along but I would try to get into safe mode and see if you can restore further back from there?.
I sure looks like a virus/worm/malaware but it could as simple as a driver corruption.
Things I would try in Safe Mode:
1.- Restore from it and pray to God (hard) that this is all it takes
2.- Uninstall the drivers for your mouse and after rebooting, Vista will try to install generic ones that you may use.
3.- get a hold of a program called "Malawarebytes", install it and run it in safe mode as well but after you have updated to the latest definitions.
Come back and tell us if that fixed your issue so others can take advantage and use it.