[expanding a little on f00ge's post]
When you get the too fast to work mouse/TB problem, you're hitting a bottleneck somewhere. It could be the hardware: sensors, deboucing circuit, quadature-to-USB (or to ps/2, to serial, ect) chip, or the USB (or ps/2) bandwidth. It could be windows: buffer overrun in the driver or API, or windows sensitivity too high. It could be mame: sensitivity "multipler" too high, incorrect/incomplete emulation. Or the original game: original machine's hardware/software limits like the above listed PC limits.
To test if it's a TB or PC problem, try spinning the TB as fast as you can in the windows desktop. If the cursor doesn't move or moves backwards on the desktop, doing stuff in mame won't help. The only thing that might help is turning down window's sensitivity, aka "pointer speed", and disabling acceleration, aka "enhance point precision". DirectX docs say this won't effect directInput apps (mame), but it does with some drivers. If these don't fix the problem in windows, the cause is somewhere in the hardware and there's not much you can do besides making sure the sensors are clear of dust and not exposed to external lights, or replacing parts (note that the parts needed to be changed might not be the sensors).
If the cursor moves fine in windows, then try turning down mame's TB sensitivity, and make sure you have disabled lightguns. If this doesn't help, either mame isn't emulating the inputs correctly or runs too slow on your system (or the original hardware couldn't do it either, which in this cause isn't true but could be in other games).