I tried adding VMAdditionsForLinux using bash install.sh and since I
have not been able to use the mouse. I found out how to use the
keyboard to move the pointer.

steps taken so far.
remove VMAdditions
repair install of OS
boot with i8042.noloop parameter
boot in fail safe mode
boot with vanilla kernel
boot with vanilla kernel with i8042.noloop
install bash install.sh
install rpm -i vmadd-kernel-module-RHEL-2.0-1.i386rpm
install rmp -i vmadd-X11-2.0-1.i386rpm

remove vmadd-full-2.0-1.i386rpm
leaving x11 and kernel-module-RHEL installed.

From research it appears to be the PS2 mouse driver disconect with
VPC. The solutions I have tried so far do not solve the issues.

-MD