Drivers up to date but in your position i would do the following. The mouse issue for me is typicall VGA issue ( at least for my experience).
Remove all drivers for the VGA and do it with the tool mentioned above to be sure everything is removed properly: http://www.guru3d.com/category/driversweeper/
Then download fresh dirvers from ATI page and reinstall.
If this does not help check your DirectX if everything seems okay there ( you might ron the stupid tests inside sometimes, not very often but rarely, they reveal issues).
Have you checked your vid card control panel that AA and AF arnt maxed out? what res you gaming on?? possibly power supply??
Try running at native res with AA and AF turned off! Your G/Cards is only = to an 8800Ultra...still quite capable but not with all the bells and whistles on todays games @ HD resolutions! Also disable Vsync!
The AA and AF on my Catalyst Control Center are set to "use application settings" I usually play on 1024x768 or something around that. I don't play on 1680x1050 for sure. I have a 600watt OCZ power supply, I think that's more than enough..
I just don't understand how my friend has a quad core 2.0 and a 9600 GSO and he runs games better than me....