Wanted to post my results for future reads.
Checked BIOS settings - nothing new/changed
I loaded X32 Windows XP Pro with SRV pack 2 and used the drivers CD that came with the board to load audio and such. I also downloaded the video driver from ATI. Otherwise no windows updates applied.
Using the utility:
http://www.softpedia.com/get/Tweak/System-Tweak/USB-Mouserate-switcher.shtml I tried all 3 settings and even used the option to revert to the original usbport.sys driver.
I also played with the sensitivity options in the analog settings of the game.
Tried old version of MAME32UI and latest ver.
I noticed that if I try not rallying the track ball, it works decent but not perfect. The track ball has been cleaned, the bearings are perfect shape.
Bottom line:
Without a doubt there is an issue with the track ball. I would believe there is something with the older HAPP USB track ball optic boards that
are causing this. I am going to throw mine away and buy one from Ultimarc as long as it'll fit in my current CP hole for the HAPP Track Ball. u