Just so you know... the "GTA_VC.SET" file will get created EVERY time you start the game if one does not exist--- so if somehow this is contributing to your problem... every time you try something new you need to delete that file after exiting the game (make sure the process is in fact not running by checking your task manager).
If the file already exists, then it will load your settings (which may include the mouse being disabled)....
I'm only pointing this out as it is not clear to everyone what that file does.
I wish you luck.
A quick google search revealed this that I'd never heard of before...
http://www.dedoimedo.com/games/gta-vice-city-windows-7.htmlSimply do this....
Delete the .set file.
Go to the screen where you set the compatiblity mode.... DO NOT SELECT ANY COMPATIBILITY MODE....
Check the "disable visual themes"
Click apply and try starting the game.
HTH....
PS... please post back if this works for you so we can add this to the bug list...
This post has been edited by Spuds725 on Monday, Mar 5 2012, 13:33