try an older version like 1.93
in general for me CTMOUSE is more trouble than what is worth and I have reverted to using DRMOUSE from DR-DOS - this is working perfect for me in all my systems and it consumes 6~7kb of ram

I never liked CTMouse's behavior. It has an annoying response curve I couldn't get around with any of the supported params. It's most apparent in Sierra adventure games. Other mouse drivers have a predictable and linear response. I even considered modifying the source for CTMouse to get rid of this annoying acceleration profile, but couldn't do it.

The only valuable feature to me in CTMouse is wheel-button-to-3rd-mouse-button mode. Cool for my Microsoft Wheel mouse, and I use the third mouse button a lot in Sierra games. But I prefer a predictable motion over three-buttons, so I'm using MS MOUSE driver. It loads high, so I don't care about its mem footprint. I have 617KB conv mem which is enough for any thing, and all drivers are in upper memory.

Keropi, wbahnassi, thanks for your replies. I decided to give msmouse a go, I've tried version 6.26 and 7.04 and in both cases get 'Driver not installed -- interrupt jumper missing'.

It's one of those days where my troubleshooting skills are at zero, I'm going to give this another look tomorrow.

Or I'll keep fiddling with it.
There is a lesson here about basic troubleshooting.

When I run the CTMOUSE.EXE, it NOW responds:
CuteMouse v2.0 alpha 4 [FreeDOS]
Installed at COM1 (03F8h/IRQ4) in Microsoft mode

and the mouse now works.

I'm using a Microsoft serial mouse that I bought sealed new old stock on ebay. It's from that transitional PS2/serial era, so even though it is a serial mouse, it can be used as a PS2 mouse by detaching the small dongle.

I purchased another serial/PS2 dongle from Amazon, so I could just leave the dongles in the serial ports and switch the mouse between 2 PCs. It doesn't work.

I moved the original MS DB9 to PS/2 to the 386 and now the mouse works. Sigh.