I have a USB Logitec trackball. Typically I have it plugged into a USB hub. If I unplug it while Puppy is booted it kernel panics. If I plug it directly into the USB port on the computer it does not kernel panic when it is unplugged. I have tried this with two different hubs, Chubby Puppy, and Puppy Bare Bones. Puppy 1.0.3 does not have these symptoms. I will try it with a USB mouse and let you know if it still happens.
Edit: Yep, The same thing happens with a USB mouse.
1.0.4 kernel panics with USB trackball
I vaguely recall seeing that the USB controller on the motherboard does not see all the USB ports the same. I know that some computers can not use a USB keyboard, for instance, plugged into a front USB outlet, but will use it when it is plugged into a rear outlet.
Have you tried the trackball in other USB outlets on the same computer?
Have you tried the trackball in other USB outlets on the same computer?