Is this a virus you know?

I have this end user pc running windows 98 which has developed an intersting problem. In safe mode, all mouse operations are possible but not in normal mode. In normal mode, I can only navigate the pc with no problems using the keyboard buttons.
However when the mouse pointer moves to start menu bar or window frame menus, the computer hangs if the pointer lingers there for a moment without clicking and this also happens immediatel upon clicking.

If however I use the keyboard menu button to flip open the startmenu, I can safely open the submenus with the mouse.
I am at a loss and hope someone out there has encountered this problem before, diagnosed it and corrected it.