Hi, Jon -
If the problem does not go away when you boot the machine to a CD, then it is a hardware issue.
One item that can cause something like that is a damaged USB port or cable; such damage can cause shorts in the USB circuits. One item to consider in that regard is the mouse, particularly if you are using an Apple Pro mouse - those have a known defect, where the wires inside the cable can fray at the point the cable leaves the mouse body. The test for that is to boot with the mouse disconnected, or with a different, known-good mouse.
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If it does go away when you boot to a CD, the source is almost certainly software in origin.
It could be one or more of the OS files. A way to check for that and to narrow down possible causes is to boot with Extensions Off - restart or boot, immediately press the Shift key, keep it held down until you get the message "Extensions Off".
• If the problem has disappeared, then you have an extensions conflict, or a damaged extension. You would then need to solve for that.
One item to look for would be an old version of SoundMaster.
• If the problem does not then disappear, the base OS files themselves are damaged. The solution then would be to do a Clean Install of OS 9 using the most recent OS 9 Install CD you have which is valid for that machine, and update that install as needed to OS 9.2.x.
If the installed OS version is OS 9.2.1, and you have a retail OS 9.2.1 Install CD, there is another option - to do a custom install of just the Core System components. To do that -
- Boot to the CD, run the installer. When you select your hard drive and click okay, you'll be asked what you want to do - click Reinstall. On the last page of the installer, the page with the Start button, click the Customize button.
- On the new page, uncheck everything (make sure they have neither checks nor dashes) except Mac OS 9.x; to the right of it is a pulldown menu, preset at Recommended Installation - select Customized Installation from that.
- In the new window, uncheck everything except the first item, Core System Software - again, make sure none of the other boxes have checks or dashes. Click Okay, click Start. That will re-install the System, Finder, and other basic OS files, and nothing else.