I don't think the mouse wires are frayed because it occurs with any mouse I use, unless you mean the usb port wires. I have tried plugging the keyboard usb into the one I'm using for the mouse and it works fine.
Computer Specs:
Operating System: Windows XP Professional (5.1, Build 2600) Service Pack 2 (2600.xpsp_sp2_gdr.100216-1441)
Language: English (Regional Setting: English)
System Manufacturer: Gigabyte Technology Co., Ltd.
System Model: GA-MA74GM-S2
BIOS: Award Modular BIOS v6.00PG
Processor: AMD Athlon(tm) 64 X2 Dual Core Processor 5600+, MMX, 3DNow (2 CPUs), ~2.8GHz
Memory: 1918MB RAM
Page File: 540MB used, 3272MB available
Windows Dir: C:\WINDOWS
DirectX Version: DirectX 9.0c (4.09.0000.0904)
DX Setup Parameters: Not found
DxDiag Version: 5.03.2600.2180 32bit Unicode
DirectInput Devices
-------------------
Device Name: Mouse
Attached: 1
Controller ID: n/a
Vendor/Product ID: n/a
FF Driver: n/a
Device Name: Keyboard
Attached: 1
Controller ID: n/a
Vendor/Product ID: n/a
FF Driver: n/a
Device Name: Mass Storage Device
Attached: 1
Controller ID: 0x0
Vendor/Product ID: 0x058F, 0x6364
FF Driver: n/a
Poll w/ Interrupt: No
Registry: OK
The mice I have tried include a Microsoft wheel mouse optical usb, and a Gearhead lighted optical mouse