This may seem like a dumb point, but check to make sure
your plugs are in their proper sockets.
Please give more details, ie what you did step by step
installing the new mouse!
I have an optical mouse wired in and it works fine with w2k
try shutting down , install the old mouse, boot and then
installing the drivers for the new one. and reboot, keep
the old one installed, see how it works. if ok, then shut
down, install the new one, and boot, if no function, then
your mouse is defective...