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This issue could be a few things. 1. Make sure your driver for the mouse and keyboard are updated. 2. The mouse pad may be going bad. 3. There may be an issue with the motherboard. I would recommend checking your driver first. Then replace the mouse pad. You can also pick up a wireless mouse and plug the usb that comes with it into a usb port if you are not comfortable tearing apart your laptop.
Use an usb mouse to select control panel and then select device management. From there you need to select the mouse and from there select the mouse and right click on it. Select to uninstall the device. Then close all screens and shut down computer. Unplug the usb mouse and restart the computer. If after it completes loading and it doesn't work the you will need a new touch pad. But if it does work it means windows had an corrupt update which caused the problem. Thanks Igor!
Go into the BIOS (F2). Press Alt-P until you reach "Page 4 of 7".
Under "Pointing Device" change the setting from "PS/2-Touchpad" to
"PS/2". Reboot. The touchpad and point stick will still
function as long as there isn't a mouse plugged into the PS/2 port. If
the mouse is plugged in, it will override the integrated devices.
If you are using XP, check your mouse settings under Control Panel. Make sure that your Touch Pad is enabled. If it is but it still won't work, have a mouse plugged into a USB port that will work correctly. Then download the latest driver from the Acer site for your touchpad. Uninstall the driver that is currently being used by your system. Then install the updated driver that you downloaded. This should allow you to use your Touch Pad. If not, you may have to take your laptop in for servicing.