I just discovered just before your message > having plugged a controller in... yes a controller....... and pressing R2 switches to mouse mode.
Mind blown... so to get mouse mode working, you need a controller
There is literally no indication of this anywhere and not a single resolution online where I've seen this question asked 100 times where the resolution was use a controller lol sigh all those hours lost... I mean i learnt a lot about other settings in RetroArch, but right from the start, the latest version has this setup on Index 0 which is hidden for the reason you simply use a HOTKEY / BUTTON in my case R2
I must have tried everything under the sun except from try a controller (For obvious reasons).
There's probably a HotKey for Controller > Mouse mode switch somewhere also.
Many thanks
and hopefully if anyone else is searching for how to get their mice working, there's a special mode