It doesn't seem to be a hardware issue as there aren't any errors etc in Device Manager. I also Remote Desktop'd onto the machine and had the same problem with the scrolling go bananas. So again, I really dont think its hardware related.
I've also checked out the Event Logs and everything seems fine, there aren't any errors or warning suggesting that there is something going on.
I personally think it has something to do with a Automatic Update that may have been applied recently but dont know how to prove it/find it/fix it.
Hope you can help.