Going to be honest, i don't think was any problem with my hardware. Nothing i use has batteries, i checked mouse and it was working fine,moving camera as it should be, wasnt affecting my char at all. I unplugged keyboard, my char kept running. Even logged her, still kept running when i got back. Only restarting windower entirely fixed the problem for me.
I didn't mean there's a hardware problem with your mouse. As Mavira said, there's an option in FFXI settings (I don't think it's in game) which allows you to use your mouse to move around. It's called something along the lines of "mouse hardware". I'd have to check it out at home to be sure. You need to disable this.