Here's the messed up System.INI. As you can see a lot of garbage. If you pruge the garbage, you'll notice that many things are missing, especially in [386ENH] section, which is probably why mouse doesn't work.
[OLE Play Options]
AVIFile=Movie,1,1
MIDFile=Sound,1,2
alic Bookosi.ttf Üe @ M ? WZS
ÿ Broadway Broadway Regular BROADW.TTF Âq @ ? =M
ÿ Californian FB Californian FB Regular CalifR.TTF Fs !- ¼ - lÿ Californian FB Californian FB Bold Bold CalifB.TTF Âw 3® ÿ ? 3 ³ ÿ Californian FB Californian FB Italic Italic Califi.TTF Jd @ Ê; ? ; WYN ÿ Chiller Chiller Regular Chiller.ttf [ @ !g ? gWÅßÿ Edda Edda Regular EDDA.TTF úa @ õ¸ á ? ¸Wâÿ Enviro Enviro Regular Enviro.TTF p @ m[ ? [ W¶
ÿ Felix Titling Felix Titling Regular Felixti.ttf
y @ ¦r , rKt ÿ Footlight MT Light Footlight MT Light Regular Ftltlt.ttf ^ @
À ? ÀGiÿ Forte Forte Regular FORTE.TTF | @ U ? '_º ÿ ¡¢ºîÌÿFranklin Gothic Book Franklin Gothic Book Regular Frabk.TTF +? @ U ? 'nx
ÿ ¡¢ºîÌÿFranklin Gothic Medium Franklin Gothic Medium Regular Framd.TTF ©? @ U ? 'ã
ÿ ¡¢ºîÌÿFranklin Gothic Medium Cond Franklin Gothic Medium Cond Regular Framdcn.TTF Ê? U ÿ ? 'l§ ÿ ¡¢ºîÌÿFranklin Gothic Medium Franklin Gothic Medium Italic Italic Framdit.TTF lc @ å ? ? ÿ ¡¢ºîÌÿGaramond Garamond Regular Gara
[boot]
*DisplayFallback=0
fonts.fon=vgasys.fon
fixedfon.fon=vgafix.fon
oemfonts.fon=vgaoem.fon
386Grabber=vgafull.3gr
display.drv=pnpdrvr.drv
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[TTFontDimenCache]
0 18=11 18
[TTFontDimenCache]
0 20=12 20
[TTFontDimenCache]
0 22=13 22
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=0
[boot]
fonts.fon=vgasys.fon
[boot]
fixedfon.fon=vgafix.fon
[boot]
oemfonts.fon=vgaoem.fon
[boot.description]
aspect=100,96,96
display.drv=Intel(R) 82810E Graphics Controller
[boot]
fonts.fon=vgasys.fon
[boot]
fixedfon.fon=vgafix.fon
[boot]
oemfonts.fon=vgaoem.fon
[boot.description]
aspect=100,96,96
[boot]
386Grabber=vgafull.3gr
[386enh]
display=*vdd,*vflatd
[boot]
display.drv=pnpdrvr.drv
[boot.description]
display.drv=Standard PCI Graphics Adapter (VGA)
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[TTFontDimenCache]
0 12=7 12
[TTFontDimenCache]
0 13=8 13
[TTFontDimenCache]
0 14=8 14
[TTFontDimenCache]
0 15=9 15
[TTFontDimenCache]
0 16=10 16
[TTFontDimenCache]
0 18=11 18
[TTFontDimenCache]
0 20=12 20
[TTFontDimenCache]
0 22=13 22
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
*DisplayFallback=0
[boot]
*DisplayFallback=1
[boot]
[drivers]
*DisplayFallback=0