If this just started, the simplest fix would be to do a System Restore to latest date available when it was ok.
click start>help&support
click "undo changes..."
follow prompts and pick latest date available when it was OK.

Personal files will be ok, but any software or XP updates originally installed after the date used for the Restore will have to be reinstalled.

If that doesn't fix it, you can try running windows system file checker from start>run (sfc /scannow)

Ron

Thanks Ron... I tried first to do a system restore and got the following message:
"System Restore is not able to protect your computer. Please restart your computer, and then run System Restore again."

After rebooting and to still no avail, I tried your second solution. It ran the check fine and completed it with no errors... although, it didn't give me any sort of message at the end of the file checker? Should it have?

Still needing help.

Sounds like you have a couple of issues here. First, a dumb question: Are you sure the mouse just hasn't gone to rodent heaven? ;)
Can you borrow another mouse to test or connect your mouse to another PC?

Unfortuantely, sfc is totally uninformative. Open XP's Event Viewer (start>programs>administrative tools>event viewer. Click System at left and look in right pane for "Windows File Protection" entries around time you ran sfc. There should be at least 2. Double-click to open them. First should say "started", second one "successful". If they don't say that or if there are exta Windows File Protection entries, read each one to see what errors are reported.

If mouse is ok and no sfc errors in Event Viewer, go to this link:
http://www.kellys-korner-xp.com/regs_edits/contextmenu.reg

Copy/paste the entire text exactly into blank Notepad document. Save as menu.reg on desktop. Log off net, close all open apps. Double-click menu.reg and allow it to modify the registry. Reboot. Fixed?

As for System Restore, it's either turned off or the database may be corrupted. Open System control panel and click System Restore tab. If box "Turn off System Restore" is checked, uncheck and reboot. If not checked, check it, exit and reboot. Now go back to same screen and uncheck that box. Reboot. That deletes the database and all restore points. Manually set a restore point and reboot. Now use that new restore point to restore the system to confirm it's working again.

Ron

Hey Ron... mouse works in every other program, both buttons. (Good questions though) and there are no errors with the 'sfc' scan.

"If mouse is ok and no sfc errors in Event Viewer, go to this link:
http://www.kellys-korner-xp.com/regs_edits/contextmenu.reg" - I tried this and followed your instructions however all it does is open up the document... it doesn't seem to fix the registry. I did reboot and nothing. Am I making an error?

Thirdly, when I try to turn off System Restore it won't let me. "System encountered an error trying to enable/disable one or more drives. Please restart your machine and try again"

I think my computer is possessed... help.

Sounds like you may have saved that file as .txt instead of .reg (or maybe saved as .reg.txt). So you need to check its name. It should be menu.reg. But if right-click works everywhere else, this probably won't solve the problem.

If you click start>search>files & folders, can you search that way? Is it only the My Documents folder with this problem? Exactly why can't you search by right-clicking?

Did you (accidently) mark My Documents folder private and you're not logged in to an account with access rights to that folder...?

Try fixing System Restore as indicated in one of my earlier posts.

Ron