I have had the same problem on my lattitude. My mouse gets taken over my evil spirits and moves around or up and down.
I have noticed it when my laptop has been on for a while and or when its undocked from the docking station. I have a usb mouse I use when its not docked and a serial when it is. I thought maybe that was the problem, but even after rebooting this did not help. I changed drivers and that did not help either.
I finally got frustrated and hit the touchpad with my hand out of frustration. Amazingly the mouse stopped being posessed and I had control over it again. I worked closely with Dell support in a previous job and they would tell us the heat was an issue with the touch pad in certain environments and the elements would get too hot causing false functioning. The touch pad is heat sensitive and if it gets too hot this type of random or always moving cursor is the result.
The best thing to try is to let your laptop stay plugged in so the fans are going and perhaps give it a 20 minute cool down time. (hitting it helps, but we thats not the true solution!)
Had the same problem. My mouse moved erratically when external mouse was connected. Microsoft article states problem is with touchpad vs mouse with wheel. Touchpad uses 3 byte packets to communicate with laptop, wheel with mouse uses 4 bytes. Sometimes laptop interprets 4th bytes from wheel mouse as 1st byte from touchpad and gets confused. See http://support.microsoft.com/default.aspx?scid=kb;en-us;256043
I disconnected external keyboard (that has extra bells and whistles) and wheel mouse, turned computer on for several hours and problem went away. Need to get generic external keyboard and two-button mouse with no wheel.
Also, my hard drive access was affected. It was very slow. After leaving computer on without external keyboard and mouse, hard drive speed was back up to normal. Go figure!