Laptop mouse pointer jumps all over the screen

I am currently facing a very annoying problem with my Dell 610 laptop mouse pointer. The pointer goes out of control and either goes to one corner and stays there or randomly keeps jumping. Any attempts to control it are defeated. This is not a mouse problem. As I have tried normal mouse with balls, optical mouse, laser mouse. It even happens when I have no mouse attached to my laptop. Apparently this problem is common to XO Laptop (One laptop per child) as described here. I have tried a few suggestions given by them:

1. Put four fingers on each corner of the touchpad. Works but its back to jumpy mouse in seconds
2. Use hand lotion to rule out static electricity. Yet to try this

I think the most effective way to solve this would be to disable the touchpad. While googling for "disable touchpad" I found this link. Unfortunately the navigation given was not present in my laptop. So I switched off my laptop and started it again. Pressed F2. Went to BIOS settings. POST behavior -> Mouse and Touchpad -> Serial (use serial mouse, disable touchpad). Saved and rebooted. Now the touchpad no longer works, and as predicted, the mouse pointer has stopped jumping. Good riddance. I was terribly annoyed by this jumping mouse menace for a long time. I should have done this as soon as I faced this problem.