Curious problem and solution - problem - on a Dell Inspiron 7000 laptop, I plugged in a Microsoft Intellimouse (wired kind). The wheel on the mouse didn't seem to do anything. I checked the mouse settings, which were set (properly) to 'Assume wheel is present' - so I went to Microsoft's web site and downloaded the Intellimouse drivers. After loading the drivers, still no dice. Tried taking the mouse apart and checking for burnt parts, etc. After looking at the circuits and seeing that three different circuits were involved in the switch and the rolling fore and aft of the wheel, I decided that I would assume the circuitry was fine, since all three operations were not working.

Solution - The laptop in question has a touchpad. It was configured in such a way that when the mouse was plugged in, both the mouse and touchpad would work at the same time. Aha! Perhaps the OS was seeing the touchpad's limitations (no wheel) and using that as the mouse configuration. I went into the BIOS and changed the laptop to shut off the touchpad when the mouse was present. I rebooted and the wheel is working just fine now.