imac g3 stuck on desktop, boots fine but wont respond to any inputs. works with extensions disabled.

On my imac g3 it boots up fine but once it gets to the desktop it will not respond to anything. No mouse or keyboard inputs work and only way to turn it off is a hard reset. Weirdly though booting with extensions disabled by pressing shift during boot works fine. Mouse, keyboard, even file transfer works great. Tried to rebuild the desktop too but that did not work. Any suggestions? it is a imac g3 2nd revision, the big crt one.