I upgraded from ME to XP, but I did it the hard way. I put in a new motherboard and hard drive at the same time. I had a few minor problems. Now everything is working great and I like XP better than ME. The only problem that I have is, as I said before, if my kids log on after I do it changes some of my game settings. I'm not sure why. There might be a way to fix it but I'm too lazy to worry about it.
You might try going on the Windows web site to see if there is an updated mouse driver.