We ran into an issue where the (PS2) keyboard and mouse stopped working altogether. In the Device Manager, it showed them as having errors, and the message was “A driver (service) for this device has been disabled. An alternate driver may be providing this functionality (Code 32).”
After uninstalling all drivers that may conflict (IntelliPoint), and trying to redo the standard PS2 drivers, nothing. Until I stumbled upon this old post from Google Groups that pointed the way to a registry key that did the trick.
Navigate to HKLM\System\CurrentControlSet\Services, then look for the special service i8042prt and set the value of “start” to “1” (automatic). At this point, you can either reboot or try the command-line option of net start i8042prt, which should work as well. Restarting did the trick for us in this case.