If it works fine with a normal mouse (PS2?) and not with your “Logitech Cordless Desktop Freedom Optical (cordless keyboard and cordless and optical mouse” (USB?) maybe it can be an IRQ conflict, probably your USB port. I don’t use XP but in Win2000 u can check System Information. Start->Programs->Accessories->System Tools->System Information. In the Hardware Resources folder, check Conflicts/Sharing, if you have a conflict you can check the bios if it’s possible to do something there, maybe assign IRQ to usb? Or you can try to move the PCI card that conflict to another slot. Do you have the latest driver for the cordless Freedom?
Maybe there is an XP expert somewhere on this forum that can help you out, im not using that new fancy OS