I am using Windows 7. I also loaded an external Microsoft mouse. Everything was fine, both working for days. Then internal mouse froze. Diagnosis shows that both are working properly and no conflicts. What do I do?

I hate to sound condescending but you'd be surprised at the simple things people (I, as well) overlook. Have you switched off the internal mouse? This is usually as simple as a designated button near the pad but might be a combination like (function key [FN]) + one of the function keys along the top. Seems like I've had a laptop in the past that the external mouse conflicted with the internal and I had to uninstall the driver, maybe I am mistaken, though.
