1. Do not install the mouse software on the terminal server.
2. Try logging on as another user from this workstation, to see if there is
something wrong with the first user's profile. If both users can't use the
mouse from this workstation, try the mouse on another workstation, or replace
the mouse.
I use the following w/o any ptoblems:
standard 2 button PS2 Mouse
standard 2 button PS2 Mouse w/ scroll wheel
optical 2 button PS2 Mouse w/ scroll wheel
optical 2 button USB Mouse w/ scroll wheel
optical cordless 2 button USB Mouse w/ scroll wheel
Notebook touchpad
4 button USB Trackball