This is weird. I have 3 Windows 2003 servers which the PS2 mouse port stopped working on in the last 2 weeks. I suspect a Windows Update but I don't know what to do now (other than buy some converters and start using USB port). I've tested a USB mouse and it works.
I can't just replace the mice since this runs through a KVM switch which doesn't support USB. But we have tested the servers without the KVM and have concluded that the PS2 port is no longer working.