Trackpad/External Mouse not working

Originally from ticket #28318.

The problem was with an Kasepersky overlay that is supposed to prevent virtual mouse clicks.

http://www.thatcomputerguy.us/index.php?option=com_content&view=article&id=162:mouse-doesent-work-code-39-in-device-manager-properties&catid=56:really-geeky-stuff&Itemid=61