OS X :: Immediately Pops Up With A White Screen Of A Keyboard That Says One Is Not Connected?

I am new to the forum and am new to Macs in general. My first Mac (a 350Mhz B&W G3) I bought 2 years ago and only used it a handful of times. I'm mostly a PC user. But anyhow here is the issue. I recently bought a G4 Mac Mini (1.25Ghz,512Mb,40Gb) off the bay knowing it had an issue with the USB ports. So I researched as much as possible about the problem prior to making the purchase. I'm a pretty tech savvy guy and figured it would be fun. But this has got me at my wits end. It has OS X Tiger on it and when you start it up it starts the "Welcome" in a billion languages movie, then it shows the the "Tiger getting started screen".

After that it immediately pops up with a white screen of a keyboard that says one is not connected. My keyboard for this is an Apple wired aluminum one with white keys (just bought it about 4 months ago and can confirm it WORKS). My spare keyboard is an Apple B&W G3 keyboard and also can confirm it WORKS. I have two spare mice that I use for these kind of projects. One is a wireless Logitech "Cordless Optical Mouse for Notebooks" and the other is a Microsoft wired "notebook optical mouse 3000" model 1049. So, yes I switched them around on USB ports, nothing. I tried the PMU reset about 10 times, nothing. I replaced the CR2032 battery with a fresh one, nothing. So, I got curious....I have a USB LED light meant to clip on the screen of a notebook to illuminate the keyboard. I plugged it in and guess what it works! I also have a Thermaltake USB 80mm fan sitting on my desk as a fan to cool me off, it has a rheostat on it to adjust intensity. I plugged it in and tunred it all the way up and it worked just as good as it does on my HP desktop.

So it seems it isn't a lack of power from these USB ports, it seems that maybe a controller meant to communicate with a mouse/keyboard just went deaf,dumb and blind. Am I right to assume that when you plug in a keyboard or mouse the PC/Mac sends a signal telling the peripheral to "turn on"? Cause it seems it isn't doing that. The LED light and fan don't need confirmation to turn on, they just need power....so they turn on. but my Keyboard and mouse don't do anything. I though it might have been Tiger (possibly?) so I removed the HDD and plugged in a wiped Hitachi 100Gb (2.5") and put in my Mac OS X 10.5 "Retail" disc in to see if it would change it's behavior. With the HDD blank it booted successfully into the Leopard disc and went right into the "choose main language" screen. Nothing, neither my keyboard or mouse worked at all.