Windows XP Non-Responsive to mouse

you rebuilt the system, did you ever replace the mouse? i DID have an issue like this at one time back in 2002ish, but I forgot what fixed it... it might've been proprietary mouse drivers; switch vendors of mice and try again?

Agree with truromeo4juliet.  This sounds like a mouse problem.  Try replacing whatever mouse is on the system with an optical USB mouse and see if the problem is alleviated.

I am curious also to know if you did replace the mouse.
Also, you could have overheating problem when your Video, Chipset or HDD gets too high temperature that disk gets off.

I have yet to replace the mouse.  We have a generic optical Microsoft mouse connected currently.  I will swap out with the Dell factory that came with the unit and get back to you.  I believe the lockup occurs at some point every night.

If the Microsoft optical mouse suite is installed, check the mouse button mapping after the problem occurs to see if the mouse buttons have been disabled or remapped to non-standard functions.

Replacing the mouse wasn't the fix.  Came in this morning and logged into the workstation and no longer and click on anything.  Start Menu still pulls up as it should but no right click and no program shortcuts will respond or load to the mouse clicks?

If you turn off the machine - keep if this way for 15 minutes, turn it on - does it respond?
Check if the machine is clean of dust and does not overheat.

Are you positive that the OS is not infected with any rootkits / malware / spyware / virus ?

Can you try a live cd (like Ubuntu Linux) to see if the problem replicates on other OS too?

Scan with a couple of antivirus software to be sure first (like malwarebytes, spybot, combofix, trend micro house call)

Can you send a list of startup programs (using HiJackThis, if possible?)

Logfile of Trend Micro HijackThis v2.0.4
Scan saved at 12:49:16 PM, on 8/19/2010
Platform: Windows XP SP3 (WinNT 5.01.2600)
MSIE: Internet Explorer v7.00 (7.00.6000.17080)
Boot mode: Normal

Running processes:
C:\WINDOWS\System32\smss.exe
C:\WINDOWS\system32\winlogon.exe
C:\WINDOWS\system32\services.exe
C:\WINDOWS\system32\lsass.exe
C:\WINDOWS\system32\svchost.exe
C:\WINDOWS\System32\svchost.exe
C:\WINDOWS\system32\spoolsv.exe
C:\Program Files\AVG\AVG9\Identity Protection\Agent\Bin\AVGIDSAgent.exe
C:\Program Files\AVG\AVG9\avgwdsvc.exe
C:\Program Files\DHS Applications\Common\DHSSessMgr.exe
C:\Program Files\Nero\Nero8\InCD\InCDsrv.exe
C:\Program Files\Java\jre6\bin\jqs.exe
C:\Program Files\Common Files\Microsoft Shared\VS7DEBUG\MDM.EXE
C:\Program Files\Nero\Nero8\InCD\NBHRegInCDSrv.exe
C:\WINDOWS\system32\HPZipm12.exe
C:\WINDOWS\system32\svchost.exe
C:\Program Files\AVG\AVG9\avgam.exe
C:\Program Files\AVG\AVG9\avgnsx.exe
C:\Program Files\AVG\AVG9\avgcsrvx.exe
C:\Program Files\AVG\AVG9\avgcsrvx.exe
C:\Program Files\AVG\AVG9\avgchsvx.exe
C:\Program Files\AVG\AVG9\avgrsx.exe
C:\Program Files\AVG\AVG9\avgcsrvx.exe
C:\WINDOWS\Explorer.EXE
C:\WINDOWS\system32\wscntfy.exe
C:\WINDOWS\system32\hkcmd.exe
C:\WINDOWS\system32\igfxpers.exe
C:\PROGRA~1\AVG\AVG9\avgtray.exe
C:\Program Files\Analog Devices\Core\smax4pnp.exe
C:\Program Files\Nero\Nero8\InCD\NBHGui.exe
C:\Program Files\Nero\Nero8\InCD\InCD.exe
C:\Program Files\Common Files\Java\Java Update\jusched.exe
C:\Program Files\Common Files\Nero\Lib\NMIndexStoreSvr.exe
C:\Program Files\AVG\AVG9\Identity Protection\agent\bin\avgidsmonitor.exe
C:\WINDOWS\system32\ctfmon.exe
C:\Program Files\Fusion Download\FDownload.exe
C:\Program Files\Common Files\Nero\Lib\NMIndexingService.exe
C:\Program Files\Fusion Download\DPMOffload.exe
C:\WINDOWS\system32\rundll32.exe
C:\WINDOWS\system32\spool\drivers\w32x86\3\HPBPRO.EXE
C:\WINDOWS\system32\spool\drivers\w32x86\3\HPBOID.EXE
C:\WINDOWS\system32\rundll32.exe
C:\WINDOWS\system32\winlogon.exe
C:\WINDOWS\system32\rdpclip.exe
C:\Program Files\Internet Explorer\iexplore.exe
C:\WINDOWS\system32\msiexec.exe
C:\Program Files\Trend Micro\HiJackThis\HiJackThis.exe

R1 - HKCU\Software\Microsoft\Internet Explorer\Main,Search Page = http://go.microsoft.com/fwlink/?LinkId=54896
R0 - HKCU\Software\Microsoft\Internet Explorer\Main,Start Page = http://go.microsoft.com/fwlink/?LinkId=69157
R1 - HKLM\Software\Microsoft\Internet Explorer\Main,Default_Page_URL = http://go.microsoft.com/fwlink/?LinkId=69157
R1 - HKLM\Software\Microsoft\Internet Explorer\Main,Default_Search_URL = http://go.microsoft.com/fwlink/?LinkId=54896
R1 - HKLM\Software\Microsoft\Internet Explorer\Main,Search Page = http://go.microsoft.com/fwlink/?LinkId=54896
R0 - HKLM\Software\Microsoft\Internet Explorer\Main,Start Page = http://go.microsoft.com/fwlink/?LinkId=69157
R1 - HKCU\Software\Microsoft\Internet Connection Wizard,ShellNext = http://go.microsoft.com/fwlink/?LinkId=74005
O2 - BHO: AcroIEHelperStub - {18DF081C-E8AD-4283-A596-FA578C2EBDC3} - C:\Program Files\Common Files\Adobe\Acrobat\ActiveX\AcroIEHelperShim.dll
O2 - BHO: WormRadar.com IESiteBlocker.NavFilter - {3CA2F312-6F6E-4B53-A66E-4E65E497C8C0} - C:\Program Files\AVG\AVG9\avgssie.dll
O2 - BHO: Java(tm) Plug-In 2 SSV Helper - {DBC80044-A445-435b-BC74-9C25C1C588A9} - C:\Program Files\Java\jre6\bin\jp2ssv.dll
O2 - BHO: JQSIEStartDetectorImpl - {E7E6F031-17CE-4C07-BC86-EABFE594F69C} - C:\Program Files\Java\jre6\lib\deploy\jqs\ie\jqs_plugin.dll
O4 - HKLM\..\Run: [IgfxTray] C:\WINDOWS\system32\igfxtray.exe
O4 - HKLM\..\Run: [HotKeysCmds] C:\WINDOWS\system32\hkcmd.exe
O4 - HKLM\..\Run: [Persistence] C:\WINDOWS\system32\igfxpers.exe
O4 - HKLM\..\Run: [Synchronization Manager] %SystemRoot%\system32\mobsync.exe /logon
O4 - HKLM\..\Run: [Adobe Reader Speed Launcher] "C:\Program Files\Adobe\Reader 9.0\Reader\Reader_sl.exe"
O4 - HKLM\..\Run: [AVG9_TRAY] C:\PROGRA~1\AVG\AVG9\avgtray.exe
O4 - HKLM\..\Run: [SoundMAXPnP] C:\Program Files\Analog Devices\Core\smax4pnp.exe
O4 - HKLM\..\Run: [NeroFilterCheck] C:\Program Files\Common Files\Nero\Lib\NeroCheck.exe
O4 - HKLM\..\Run: [SecurDisc] C:\Program Files\Nero\Nero8\InCD\NBHGui.exe
O4 - HKLM\..\Run: [InCD] C:\Program Files\Nero\Nero8\InCD\InCD.exe
O4 - HKLM\..\Run: [SunJavaUpdateSched] "C:\Program Files\Common Files\Java\Java Update\jusched.exe"
O4 - HKCU\..\Run: [IndxStoreSvr_{79662E04-7C6C-4d9f-84C7-88D8A56B10AA}] "C:\Program Files\Common Files\Nero\Lib\NMIndexStoreSvr.exe" ASO-616B5711-6DAE-4795-A05F-39A1E5104020
O4 - HKCU\..\Run: [ctfmon.exe] C:\WINDOWS\system32\ctfmon.exe
O4 - HKUS\S-1-5-21-2371712937-486780029-2215059333-2366\..\Run: [IndxStoreSvr_{79662E04-7C6C-4d9f-84C7-88D8A56B10AA}] "C:\Program Files\Common Files\Nero\Lib\NMIndexStoreSvr.exe" ASO-616B5711-6DAE-4795-A05F-39A1E5104020 (User '?')
O4 - HKUS\S-1-5-21-2371712937-486780029-2215059333-2366\..\Run: [ctfmon.exe] C:\WINDOWS\system32\ctfmon.exe (User '?')
O4 - Global Startup: Fusion Download.lnk = ?
O8 - Extra context menu item: E&xport to Microsoft Excel - res://C:\PROGRA~1\MICROS~2\OFFICE11\EXCEL.EXE/3000
O9 - Extra button: Research - {92780B25-18CC-41C8-B9BE-3C9C571A8263} - C:\PROGRA~1\MICROS~2\OFFICE11\REFIEBAR.DLL
O9 - Extra button: (no name) - {e2e2dd38-d088-4134-82b7-f2ba38496583} - C:\WINDOWS\Network Diagnostic\xpnetdiag.exe
O9 - Extra 'Tools' menuitem: @xpsp3res.dll,-20001 - {e2e2dd38-d088-4134-82b7-f2ba38496583} - C:\WINDOWS\Network Diagnostic\xpnetdiag.exe
O9 - Extra button: Messenger - {FB5F1910-F110-11d2-BB9E-00C04F795683} - C:\Program Files\Messenger\msmsgs.exe
O9 - Extra 'Tools' menuitem: Windows Messenger - {FB5F1910-F110-11d2-BB9E-00C04F795683} - C:\Program Files\Messenger\msmsgs.exe
O16 - DPF: {6E32070A-766D-4EE6-879C-DC1FA91D2FC3} (MUWebControl Class) - http://www.update.microsoft.com/microsoftupdate/v6/V5Controls/en/x86/client/muweb_site.cab?1282163234328
O16 - DPF: {E2883E8F-472F-4FB0-9522-AC9BF37916A7} - http://platformdl.adobe.com/NOS/getPlusPlus/1.6/gp.cab
O17 - HKLM\System\CCS\Services\Tcpip\Parameters: Domain = cmcfc.org
O17 - HKLM\Software\..\Telephony: DomainName = cmcfc.org
O17 - HKLM\System\CS1\Services\Tcpip\Parameters: Domain = cmcfc.org
O18 - Protocol: linkscanner - {F274614C-63F8-47D5-A4D1-FBDDE494F8D1} - C:\Program Files\AVG\AVG9\avgpp.dll
O20 - Winlogon Notify: avgrsstarter - avgrsstx.dll (file missing)
O20 - Winlogon Notify: DHSWinLog - DHSWinLogDLL.dll (file missing)
O22 - SharedTaskScheduler: Browseui preloader - {438755C2-A8BA-11D1-B96B-00A0C90312E1} - C:\WINDOWS\system32\browseui.dll
O22 - SharedTaskScheduler: Component Categories cache daemon - {8C7461EF-2B13-11d2-BE35-3078302C2030} - C:\WINDOWS\system32\browseui.dll
O23 - Service: AVG WatchDog (avg9wd) - AVG Technologies CZ, s.r.o. - C:\Program Files\AVG\AVG9\avgwdsvc.exe
O23 - Service: AVG9IDSAgent (AVGIDSAgent) - AVG Technologies CZ, s.r.o. - C:\Program Files\AVG\AVG9\Identity Protection\Agent\Bin\AVGIDSAgent.exe
O23 - Service: DB2 JDBC Applet Server (DB2JDS) - International Business Machines Corporation - C:\Program Files\SQLLIB\BIN\db2jds.exe
O23 - Service: DB2 Security Server (DB2NTSECSERVER) - International Business Machines Corporation - C:\Program Files\SQLLIB\BIN\db2sec.exe
O23 - Service: DHS Session Manager - Dairyland Healthcare Solutions - C:\Program Files\DHS Applications\Common\DHSSessMgr.exe
O23 - Service: HP Port Resolver - Hewlett-Packard Company - C:\WINDOWS\system32\spool\drivers\w32x86\3\HPBPRO.EXE
O23 - Service: HP Status Server - Hewlett-Packard Company - C:\WINDOWS\system32\spool\drivers\w32x86\3\HPBOID.EXE
O23 - Service: InCD Helper (InCDsrv) - Nero AG - C:\Program Files\Nero\Nero8\InCD\InCDsrv.exe
O23 - Service: Java Quick Starter (JavaQuickStarterService) - Sun Microsystems, Inc. - C:\Program Files\Java\jre6\bin\jqs.exe
O23 - Service: Nero Registry InCD Service (NeroRegInCDSrv) - Nero AG - C:\Program Files\Nero\Nero8\InCD\NBHRegInCDSrv.exe
O23 - Service: NMIndexingService - Nero AG - C:\Program Files\Common Files\Nero\Lib\NMIndexingService.exe
O23 - Service: Pml Driver HPZ12 - HP - C:\WINDOWS\system32\HPZipm12.exe

--
End of file - 8211 bytes

I also noticed that yesterday the Windows Firewall would not start.  I had to run the command "netsh winsock reset" to get it up and running.  Worked all day and when I came in this morning said there was a windows update needing to restart the computer.  Did that and Firewall was off again and wouldnt run.  Supposedly missing files?  Windows updates are on Tuesday so checking into that.  I will be running malware and antivirus scans this afternoon to verify no infections.

I was running this system for about 6 months just fine in the IT department.  Had to move computer to a therapy department for replacement.  We installed 3rd party software dor clinical documentation purposes and also dictation software that runs on .net 2.0.  This is when the problems may have arrose so it may be due to either one of those software vendors also.  I do not know a whole lot about .NET programming but I was curious if maybe the .NET 3.5 updates and such could be the cause?

Maybe mouse, maybe not, ahh, k, you report NOT.
Sounds to me like the very typical "system becomes excruciatingly slow".  Here is what I think you will notice,you wrote you try to launch Task Manager and it "doesn't", or more accurately, it could be 10 minutes (or more!) before Task Manager finally shows up.
When it "happens" LOOK at your hard disk activity light.  Is it flicking so continuously it's practically lit solid?