Comment 40 for bug 546503

Similar issue on my dv7. Mouse was working in gdm, but stopped working once logged in.

Fixed the issue by editing the file ~/.gnome/desktop/gnome/peripherals/touchpad/%gconf.xml (as also reported here)

You can run the following command to "fix" the issue (fixed it for me).
<pre>
$ sed -e 's/\(touchpad_enabled.*\)false/\1true/' ~/.gnome/desktop/gnome/peripherals/touchpad/%gconf.xml
$ sudo /etc/init.d/gdm restart
</pre>