I think all those mouse port pins are active low - so e.g. pressing a button drags the signal to ground. Same with the pulsing for movement I think - move the mouse while checking and you should get approx half the voltage when measuring (or check with a scope).
What are you using to power your regulator (-12V? from the ATX?) and did you add the capacitors like in the datasheet?
Ian's ATX adaptor uses the same regulator and has the necessary caps.