Mouse and touchpad don't work well together

When the touchpad and USB mouse on my laptop are both enabled, neither gets
initialised properly.

After booting and logging in, the pointer seems to get stuck to the first widget
it is clicked on in each window. For example, I can drag a box on the desktop,
but then I can't activate any icons by clicking on them. If I open a calculator,
the first button I click on works, but then none of the others even receive
"enter" signals. Strangely, after clicking the middle mouse button everything
works perfectly.

If I disable the USB mouse in xorg.conf the touchpad works fine. Attempting to
disable the touchpad doesn't seem to work - it just starts acting like a regular
mouse, and sends data to /dev/input/mice.

I'm running a recent version of Hoary:
 * linux-image-2.6.10-4-k7 Version: 2.6.10-27
 * xserver-common, xserver-xorg, xorg-common Version: 6.8.2-2
 * xorg-driver-synaptics Version: 0.13.6-0ubuntu4

My laptop is a Compaq Presario 700. The mouse is a Logitech iFeel mouse.

I'll attach my xorg.conf and xorg log files, and dmesg output.