I am also experiencing this problem. Personally I'm on Windows XP and use a Intelli Explorer 3.0 mouse, which is wired. I also have a Wacom tablet, which I believe sometimes in the past actually did something crazy to create a similar problem, but this time it's not it. And as with you, the crazy scrolling problem would continue after unplugging my mouse.
I was playing WoW now when it suddenly happened. Everything was scrolling up and down and in and out. As unplugging my mouse didn't work I rebooted my machine to deal with the problem, which it seemingly did, and went back on to continue playing. After a while it started again. While working around the crazy scrolling I tried to find solutions to the problem on the web, but I found none. This is actually the only page I've seen where someone else has had the exact same problem as me. All others were Linux, Mac or Logitech specific problems.
I then scanned for adwares (allthough I found nothing in particular), and I have also reinstalled the latest Intellipoint software to see if it could help by some chance. I then unplugged my mouse once more before rebooting my machine again. Upon booting Windows started this "Boot Cleaner" thing that I've never even seen before. Not the ordinary Scan. Now, ruling out the Wacom tablet at startup and the replugging my mouse, everything is currently working fine. Allthough I won't know for sure yet, since it start going crazy completely at random.
ashok: Have you been able to find a solution since you added this question?