I use the same mouse and find it doesn't need drivers - even for Win98SE.
You can certainly try removing the drivers, because if I am right then Windows will the necessary back at the next bootup.
I don't think it is a direct hardware problem, rather a conflict probably between software items, and there's the rub.........
Suggest you load windows after ensuring that as little as possible is running at startup. Then if the mouse is happy again, add the other startup items manually and one at a time checking as you go until something upsets it all.