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The "rectangular" connection sounds like a Serial mouse.
If a PS/2 mouse is not connected (that is the round connector), you should get a message when Windows starts to load "Windows did not detect a mouse (pointing device) connected. If you are using a serial mouse, connect it now. If you have a PS/2 mouse, shut down, connect the mouse and restart the computer" or words like that. You can test it by starting without a mouse connected at all.
I have seen one or two Win 98 systems where most of the hardware was undetected (little or no devices listed in Device Manager), in those cases I would do a reinstall of Windows by booting to a Startup floppy disk and running Windows setup (unless it is a system that uses a recovery disk). All the major drivers would be needed to be available for installation when setup was finished (Windows may/should detect and install them from it's list of hardware if they had been installed correctly previously).
I cannot think of many other reasons, apart from problems that could be caused by using specialized mouse drivers/software (logitech was mentioned).
Ahhh!...try booting in Safe Mode and see if the mouse works there. You you uninstall any mouse software and remove the mouse in Device Manager there.
Matt
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