Hmm i think the reason might be the lack of power given by PC to your mouse. You should check if the red beam works when the mouse "doesn't register it or flickers between aiming and not aiming" (I hope you have the laser/optic mouse, not the one with the ball eh).
If that's confirmed, then you might have problems with your power unit. Also, if you have many USB (or any other) devices connected to your PC, you should try unplugging them so that they won't suck the power.