What are your settings for it in Mouseware?
I used to have that problem every time I formatted because I couldn't remember the settings so that I could scroll and still be able to use mouse3 in games. I finally remember so when I get on my other computer I'll give ya the settings.
edit: Here's my settings so I can use the wheel in IE and any other program but still use mouse3. In mouseware buttons tab:
Button2 (middle button) is 'Autoscroll'
Under scroller, make sure 'Use MS Office Compatible Scroll Only' is DISABLED
I like it set to 1 line also, but that is just a personal preference
Click on options > autoscroll and have 'Use MS Office Compatible Scroll Only (works as middle button)' ENABLED
Hmmt those contradict but whatever it works and I think that's what's wrong with yours.