ok a little MORE info... client has three identical machines... so I took the second one and did the same thing, set it up in an auxiliary room, use a brand new Dell usb keyboard and mouse, guess what? second machine does the same thing... cant use keyboard to log on, or mouse doesnt move..
Third machine I plugged into the old location used old dell usb keyboard and mouse, that one worked!
Though is either bad power (unlikely) or the drivers that xp is loading for these new keyboards are confusing windows and the dont work (alos unlikely) but these are the two variables...
What say you???