This sort of thing was a very common occurrence on OS versions before OS X (OS 9, OS 8, OS 7, etc.). The root cause is almost always conflicting system extensions or control panels.
You pretty much have to troubleshoot which extensions and/or control panel programs are causing the conflict. You can ether:
- turn them off 1 at a time...then reboot the computer each time until things become stable
- or...turn off ALL non-OS related extensions and control panels...then turn them back on 1 at a time (rebooting in between) until the mouse freezing starts again. Then you know you've found the "offending" system extension or control panel.
There was also a program called "Conflict Catcher" which helped with this tedious process (not sure if you have that program...or if it can still be found somewhere).
In case you don't know...you do all of this "turning on" or "turning off" via "Extension Manager".
HTH,
- Nick
p.s. God...I can't believe I remember how to do this after all these years!