Arg, this is bugging the heck out of me!
I have Red Hat Fedora Core 2 and my mouse works fine from the shell. When I try to start X, it says that Mouse0 isnt working. I tried a USB and PS2 mouse, then I tried plugging the PS2 one into a PS2-serial thing and even that didn't work. When I try to run gdm, it tells me that "the x server cannot start because your mouse isn't configured right" and that I can run the mouse config program. I tried this in all of the mouse configurations, but that didn't work either. Anybody know what I'm missing here??

Try running the xconfig files again (the automagic ones).

It may set it up correctly. Did it work during the install (did you do a gui install?)

Tell us the exact makes/models of the meeces you've tried. Also post the contents of the "Input Devices" section of your /etc/X11/xorg.conf and
/etc/X11/XF86Config files.

ya know.. I'm getting a bit of "Double Version" here..

smart move staying in runlevel 3 by default though, makes troubleshooting
from the command line sooooooo much easier.

In Redhat from the command line..

redhat-config-mouse-tui
or
/etc/inet.d/system-config-mouse-tui
(or within the hierarchy of /etc/inet.d/* there should be something similar.)

should get you a generic tab, space and arrows config interface
for what you've got.. then select away test and exit.

just a thought though..