I have a nice small (portable) Logitech USB MiniWheel Mouse.
I wanted both the touchpad and it to work simultaneously and to not have to manually switch back and forth when it's not connected.
This is controlled for X under XF86Config. I'm not worried about mouse usage under command line mode (gpm) so I didn't delve into that.
The details are in the READ MORE link at the bottom of this article....   

My XF86Config sections that are pertinent:
Section "InputDevice"
  Driver       "mouse"
  Identifier   "Mouse[1]"
  Option       "Device" "/dev/mouse"
  Option       "Emulate3Buttons" "on"
  Option       "Name" "Autodetection"
  Option       "Protocol" "ps/2"
  Option       "Vendor" "Sysp"
EndSection

# ADDED BY HAWKE
Section "InputDevice
        Driver          "mouse"
        Identifier      "Mouse[2]"
        Option          "Device" "/dev/input/mice"
        Option          "Name" "Autodetection"
        Option          "Emulate3Buttons" "off"
        Option          "Protocol" "IMPS/2"
        Option          "Vendor" "Sysp"
        Option          "ZAxisMapping" "4 5"
EndSection

.... ALSO .....

Section "ServerLayout"
  Identifier   "Layout[all]"
  InputDevice  "Keyboard[0]" "CoreKeyboard"
  InputDevice  "Mouse[1]" "CorePointer"                 #added by Hawke
        InputDevice     "Mouse[2]" "Always Core"        #added by Hawke
  Option       "Clone" "off"
  Option       "Xinerama" "off"
  Screen       "Screen[0]"
EndSection


<ul>
Here are links to the sites I used to get this information:
<li><a href="http://www.faqs.org/docs/Linux-mini/XFree86-Second-Mouse.html">Second Mouse in X mini-HOWTO</a></li>
<li><a href="http://www.linuxnetmag.com/en/issue5/m5mouse1.html">Logitech Wheel Mouse under LInux</a></li>
</ul>