Since itt's a new mouse, I hope you uninstalled the old drivers/software, which brings me to the next thing to check - did it work without the drivers? Most of the time Windows XP will recognize the mouse even without the drivers. Check if the mouse has connection Mostly there is a little button on the bottom of the mouse you have to press once after you pressed the "Connect button on the receiver and there is a LED which will blink when the receiver is receiving data. If it's RF don't place cell phones or other RF devices neirby, they might interfere with the connection.
That's about all I can think of. Good Luck!
well maybe one more thing; check your conf.ini file if it has mouseUse=2 in it - see
my annotated conf.ini (do a ctrl-f to find things concerning the mouse