i recently bought a dell dimension e520 desktop which does not have a p/s2 mouse and keyboard.

i'm a newbie and i just found out that softice doesn't support usb mouse.

i spent a whole night looking for an answer for my problem. is there anybody out there who can help?

SoftIce 4.05 is waaayyy outdated.
What is worse, even the latest version, DS 3.2 has not been updated for ~2 years, so do not expect it to be very forgiving, particularly with new computers and OS.

Go to OllyDbg if you are a newbie.