I was doing some research on the error code that you are getting~ 0167:BFF9DFFF.
The majority of the problems fall into 2 possibilies: faulty RAM or printer conflicts.
Lets start off with the easy one.
Printer conflicts-If you do not have a printer, then you know it is not this one

. The next time that you have to restart your computer, turn off the printer (better yet, unplug it from the computer), then turn the computer on. See if there is much of a difference. If there is, then an update on the driver may work wonders for you.
Faulty RAM-It certainly would not hurt to get more RAM for your computer anyway. The graphic work that you do, surely drains it fast. I will do a search for(1)256 MB. You
could move your current one to slot 1 and put the 256 in slot 0 (where your RAM currently is), but if the RAM is
possibly faulty, then I would not take the chance, at least not now. I will find the type of RAM that your computer can use, and post back a link to purchase online.
Just to let you know why RAM could have an impact on your mouse movement (and anything else). What is the first thing you do when the pointer stops? You move the mouse around and click randomly, thinking it is stuck, right? You may not see this, but the computer remembers what you are doing. When it wakes up from its mini-coma, it does all of the movements and clicks that you did. On your screen it may appear erratic, but in reality, it is catching up to what you did, if that makes any sence.
I know that you need to get your computer up and running fast to complete a project, so if you can tell me some electronic stores that you have nearby, I will do the search for those stores only. This way, you can pick it up at the store, and save on the time for shipping.
Remember what I said earlier about having three possibilities for problems? I am glad to see that you do not have any nasties on your computer. I do not 'work' in that department, but I am glad that it was taken care of fast. Just do as they request about the anti-virus program. Thanks Raw and Papakid

Edited: I found the RAM that your computer uses. You have 3 slots for your RAM. It is likely that you have (1)128 MB already (as opposed to (2)64MB). I also looked at the specs for it, and you can not use any (single)RAM higher then 128, which is no problem. The specific one for you is 128MB PC100 168Pin RAM. The prices range from $35-40 ea, without shipping. I would recommend that you get 2 of them. Even though you do have space to include your current RAM, I would leave it out for now. With 2 of these sticks, it will seem like a new computer again

Below is a site for Outpost.com, but if you can provide a closer store, I will post back with a link to that one.
Outpost.comInstallation of RAM is one of the easiest things you can do on your computer. I will be more then happy to walk you through it, if you want to go that route.