"No mouse found"

After upgrading from 10.11.6 to 10.12.1 my Microsoft Comfort Mouse 4500 is no longer recognized as a mouse. I get the message "No mouse found" when I open the Mouse preference. I am able to use the mouse even though it is not recognized but the behavior with the scroll wheel is erratic (I can only scroll one direction in some apps). I tried connecting the mouse directly to the computer instead of the keyboard but the result is the same. I also tried a different model Microsoft mouse and it functions correctly.

Any suggestions on what is wrong?

As displayed below, the Microsoft Comfort Mouse 4500 is recognized as being attached in System Information:

Microsoft® Comfort Mouse 4500:

Product ID: 0x076c

Vendor ID: 0x045e (Microsoft Corporation)

Version: 0.83

Speed: Up to 1.5 Mb/sec

Manufacturer: Microsoft

Location ID: 0x1a133000 / 5

Current Available (mA): 500

Current Required (mA): 100

Extra Operating Current (mA): 0