I had the exact same problem, no mouse movement registered, only mouse clicks, and I managed to find a strange solution. I use COMODO Insternet Security as a firewall/malware blocker, and there is a build in Defense+ feature, that allows you to regulate application rights, like disk write, registry modification... When I completely disabled this feature, my mouse was working, so I added it to the exclusion list, and now it is perfectly fine. I believe you have a similar security software, blocking APGame.exe, disable it, and it should be ok.
