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Your USB mouse is probably working properly, clean up your mouse pad, it's acting erratically because there's pressure on some parts of your mousepad that you aren't initiating. This is also the reason why you can't use a USB mouse properly because your touchpad is still active. Either clean up your touchpad or disable it in the BIOS and use your USB mouse.
Go to control panel, then to Mouse. You should see a tab saying device settings. There, you should see your touchpad and you can disable it.
On your start menu by the little clock where all the icons are there should be a touchpad icon. You can also go into this through control panel - mouse - click to change touchpad settings. It's right under the touchpad settings window.