Not sure on your particular set up but Mamewah worked pretty much 'out of the box' for Mame when I set it up for the first time.
Once I had command line mame set up and working I simply extracted Mamewah to my C:\ drive, modified the Mamewah mame.ini to point to my mame.exe and roms folder, booted it up, clicked generate list and it was away, no issues with the trackball or anything else.
Once you have done the whole command prompt, mounting the drive thing with command line mame and have it all sitting happily in a folder (C:\mame works well enough). After making sure you have installed any supplemental system files (found on the mamewah homepage) for Mamewah to run properly, you should simply be able to point all the relevant paths in the Mamewah config file to your mame folder and theoretically it should all light up.
It sounds like your issues may be more to do with setting up command line mame properly in first place rather than getting mamewah to work. I know I found setting command line mame up a royal pain in the backside the first time I attempted it since I had no experience with Dos or command lines.
The start from scratch approach may see better results.
Edit: One last little note. From what you are describing it sounds like you may not have set up the correct path to your mame, roms folder which is why when you try to execute a game from the menu it just flashes a command prompt then dies. Check that your roms path in the mame.ini is correct (C:\mame\roms or wherever you keep them) and that the rom extension is set to zip.
If its any help my mame.ini looks like this:
### mame.ini (mamewah v1.61) ###
emulator_title