Thanks Richard.
It's highly unlikely to be spyware/virus related as I did a clean install of Windows last week and it did not help.
I'm sure it's a hardware fault.
The 'jerking' seems to be related to the mouse. It seems to be OK with one particular USB mouse but not the new one I have bought?
I tried a different mouse as it seemed to be related to the PS2 mouse.
I will try stripping the system down to the bare bones to see what gives.
Thanks for you help.