Kevin,
This was an accidental find:
When I wiggle the mouse a lot in qemu while booting the XP CD, I get a lot more checks (around 7000 more) of the keyboard (handle_1601). In hardware I don't. Maybe the problem has to do with a missing mouse interrupt (and XP checks the keyboard every time it gets a mouse interrupt)? I'm thinking that's a possibility with the "sendmouse full" error.
Thanks, Myles