Optical mouse giving problem

Had a regular keyboard and an optical mouse on my
PC running WinXp.
It was Microsoft optical mouse - 3-4 years old.
Started giving problems recently, so I got a new
optical mouse - some unknown brand & connected
it. Booted the machine - at boot up, got a "Keyboard
not detected - press F1 to continue" message. Disconnected
the new mouse & started again - Machine started detecting
the keyboard. Booted the machine & attached the new mouse
- keyboard stopped working again, till I disconnected mouse
- What the hell could be the problem?

So I thought, maybe the old mouse has some installed drivers
which I needed to uninstall. So I went to Control Panel, System,
Hardware - Device manager - Mouse & clicked (with keyboard)
uninstall - so that got uninstall - still no change in the problem.
The moment I connect the new mouse, keyboard stops working.
Also I have no idea how to go about installing a mouse in the
device manager again.

Can someone help?