First you should not expect the mouse to work over the serial terminal session. When you use this, you are basically following the in the tradition of using a mechanical paper-printing teletype to connect to a remove computer, and those didn't exactly have mice or GUIs.
Of more concern is the non-response to keystrokes. There are three general issues to look into there:
1) The baud rate might be set incorrectly, however the printing of boot messages hints that this is likely not the case
2) You may have connected to the pi's serial output, but not connected to the wire to its serial input (perhaps you connected it elsewhere by mistake)
3) The PC may not be actually sending characters, if it is expecting hardware control signals to be set by the remote system first. Check in the settings of your serial program. You may also want to try disconnecting the USB serial cable from the pi, and holding a jumper between it's transmit and receive pins - when you do that, anything you type in the terminal program should loop back and display.
4) Finally, if you get characters echoed by the pi but no response to commands, you may not have a suitable mapping of the return key to a line ending recognized by the pi - it may be expecting a newline character. Try both control-J and control-M as an experimental alternative, and see if either gets you a response. If so, try changing your carriage return / line feed mapping.