Well, at 2am this morning events dictated a new approach as things had
gotten to the point that the PC would no longer boot windows before
freezing. I threw in the towel....wiped and reformatted the hard drive
and did a clean install of Win2K Pro. All seems OK now...I need to
install Win2K SP4 [a 130Mb download] and then all my protective
stuff...AVG 7.5, Ad-Aware, Comodo and SpyBot S&D. When that is stable
and working OK, then I will install all the applications software.

The problem was definitely Malware of the "Downloader" or "Backdoor"
Tojan type that spoofs the Windows "SMSS.EXE" and takes over the PC.
From the GOOGLE search, it is detectable but apparently not "fixed" by
many [if any??] anti-virus programs. It displays a variety of symptoms
including the stall/freeze of the Mouse and Keyboard as I first saw.
None of the protective applications I had installed [AVG 7.5, Ad-Aware
and SpyBot] detected it on full scans...only AVG came up with periodic
"Threat Alerts" regarding trouble with the "SMSS.EXE" file. Here's
hoping my problems are all behind me now.

Thanks for all your thoughts, emails and postings....it was a great
comfort to know that there are others interested enough in a [my]
problem to offer their help.