USB mouse turns off in XP-sp3

I have 3 mice (2 old ones that I have tried with the same results), 2 are logitech and 1 no-name. OS: dual boot linix unbuntu and XP-sp3. MB does not have a PS2 port.
Everything works fine in linix, but in XP-sp3 I have mouse / USB port problems.

Problem: USB mouse stops responding, red led turns off, occassionally the mouse pointer also disappears. unplug the mouse and plug it back in to usb port and system finds the mouse and it resumes working. Problem exists in all programs and does not seem to be tied to internet. Problem exists for mouse on every usb ports (2 internal front, 4 internal MB ports, and additional 4 PCI usb ports. Other USB devices not affected at all ...web cam and scanner (both now disconnected), camera dock, usb drives all continue to work properly and do not disconnect ...even when the mouse stops they continue to work properly.

Attempts to resolve problem: Checked mice on other computers, they all work perfectly. Ran SAS, Malwarebytes, spybot, Ccleaner, - nothing found. I have edited power settings on USB ports without any improvement. updated logitech drivers, uninstalled logitech drivers, now using windows HID generic mouse driver ...all with same random loss of mouse performance. Considered a possible hardware problem until I tried the linix OS side of the computer ...everything works perfectly there - mouse responds promptly, and never turns off. Restored system to previous restore dates, now restored to a point well before when this problem started. This also did not improve anything.

Before I do a Windows Re-install ....Any suggestions?

 

From all your troubleshooting, it has to be a windows problem rather than a hardware problem.
What is running on the computer? It almost seems like something kicks in and steals the mouse's IRQ.
Either post from Device Manager or use Process Explorer to see what is running.
http://technet.microsoft.com/en-us/sysinternals/bb896653.aspx