OK, I'm going to give some complete details here:-
1. First I ran "xorgconfig" from root and selected the mouse protocol as "PS/2".
2. Next I opened /etc/X11/xorg.conf and changed the line from "/dev/sysmouse" TO "/dev/psm0"
3. After that I started X from root and the mouse worked(Could'nt continue from root as DesktopBSD
doesnt allow root login except for changing System Settings).
4. Next after this I logged out of root and logged into my account(rahul), here too the mouse worked but there were 3 dialog boxes(one bash, the other xterm and last one I dont remember), so I dont think KDE started here.
5. So I used CTRL+ALT+F2 and "init 1" and terminated X.
6. Finally I restarted the system using "halt".
7. When the system restarts and goes to the Login Screen the mouse does'nt work.
I have inclued 2 pics:-
Pic 1 - Output of "dmesg"
Pic 2 - Output of "fstat | grep psm0
Pic1
*img101.imageshack.us/img101/9936/pic1ty3.th.png
Pic2
*img395.imageshack.us/img395/2856/pic2ul9.th.png
PS - Before running xorgconfig and editing it I followed Step 5.