Its your vid cards 3d antialiasing.
I have a different card than you (geforce 2 mx 64MB) but I would think that with your vid card you can also adjust the 3d antialiasing.
The choices my card has available are: "allow programs to set antialiasing", "no antialiasing", "2x" and "4x". When my antialiasing is set at any one of them except "no antialiasing" my mouse is like yours - slow (laggy). So i set mine to "no antialias."
but the graphics (namely the mountains in the distance) look a little jagged at the edges. But at least my mouse lag is minimized.
If you right click on your windows desktop and click on the settings tab you should be able to adjust your cards settings.
Good luck hope this helps ya!
