The great mouse caper!!!!
One of the things that I have found is rarely does the generic windows mouse driver fail to operate the mouse. If it is working in all other modes/games/programs it may be a bad load of Prophecy. Having had the game for two years or so, I have had a couple of times where I had to delete it and reinstall to get it to wake up and find my joystick, even when everything else works fine. Not to say it isn't a driver, but I have burned through many mice with my kids and just hook up a new one and never load the drivers, with never an issue.