go into your desktop setting and turn off some of the effects and see if the problem remains. Also are your nvidia drivers from nvidia or the ones from MS? The MS drivers are about 6 months behind the Nvidia ones.
I just built the system .........Abit NF7, Barton 3000, G-force 5200, 1-stick 1 gig ram and so on. Windows XP Pro is not accepting a lot of drivers. The C/D that came with the board set most drivers except the audio and I am using 67.77 detonator video driver. It's always worked in the past.
ok so you hardware is certinaly not under powered. Are you using usb or ps2 mouse/keyboard. I've seen this happen before when using a mix between them. Also if you've installed software for your mouse remove it. Just use the windows mouse drivers anything else usually causes issues.
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Also what's your processer speed, ram, etc....