Mouse lag

[Acaila]

I experience about a 500 ms delay from moving my mouse to when it displays, accompanied with the speed up, speed down feeling of mouse lag. This only occurs when on Hossin and in the dense tree areas of Forseral and Amerish. It is mainly related to the trees. The problem is PlanetSide specific, doesn't happen in another games or applications. It is a delay in IO, not in any way related to FPS, bandwidth usage or CPU usage.

My system:
CPU: P4 3.0 800MHz FSB
Mobo: Asus P4P800 Deluxe, BIOS v1010
RAM: Kingston PC3200 DDR
GFX card: Geforce FX5600 (driver version 52.16)
Using onboard sound.
HDD: IBM 60GB
Connection: 512/128 ADSL, ethernet modem.
OS: XP SP1
Mouse: Logitech MX300 using MS generic drivers, PS2.

What I have tried to get rid of it:
Various mouse drivers, the MS generic drivers work the best.
Various GFX drivers, including the older detonator drivers such as 43.03.
Various chipset drivers.
Altering win32 priority settings in the registry to put the mouse and keyboard input at a higher priority.
DirectX8.1 and DirectX9.
Increasing the mouse sample rate and input buffer size.
Altering BIOS settings, though I haven't tried turning off HT.

The problem originated when I built this PC. It is very frustrating, low FPS is preferable, atleast I can still kill people with low FPS. Funny how with an upgrade, I traded my poor FPS for an even worse problem. Atleast it only happens on Hossin and a little mildly (the dense forest areas) on parts of Forseral and Amerish.