I know that this problem was discussed in more than one forums, but I could not find what should I do with my case

Running FC7. I installed several packages (I do not remember what are they) last night. Today, when I booted up the computer, I got this message:

Failed to start the X server (your graphical user interface). It is likely that it is not set up correctly. Would you like to view the X server output to diagnose the problem.
I tried Ctrl-Alt-F1 where I get the X server failure and go to a command line.
1- cat /var/log/Xorg.0.log | grep EE

(WW) warning , (EE) Error, (NI) Not Implemented, (?) unknown, (EE) unable to locate /open config file

(II) Loading Extension MIT-SCRENN-SAVER
(EE) Failed to load module vga (module does not exist, 0)
(EE) open /dev/fb0: No Such file or directory
(EE)<default pointer>: Cannot find which device to use.
(EE)xf860OpenSerial : No Device specified
(EE)<default pointer>: cannot open input device
(EE) PreInit failed for Input device <default pointer>

2- Then I run : Xorg -configure

Xorg is not able to detect your mouse. Edit the file and correct the Devices.
Your xorg.conf file is /root/xorg.conf.new.
To test the server, run 'X -config /root/xorg.conf.new

3- Then I run Xorg -config /root/xorg.conf.new

Fatal sever error:
failed to initialize core devices

4- Then I run system-config-display --reconfig
The output was :

xconf.py: Fatal 10 error 104 (Connection reset by peer) on X server:17.0.
--display=:1: Fatal 10 error 104 (Connection reset by peer) on X server:17.0.xconfig.py

Mouse is optical logitech wired USB
cat /etc/X11/xorg.conf (it is not copy and paste, I had to typed them, therefore if there is any misspelling do not count that )

Section "ServerLayout"
Identifier "x.org configured"
Screen 0 "Screen 0" 0 0
InputDevice "Mouse0" "Core Pointer"
InputDevice "Keyboard0" "Corekeyboard"
EndSection
Section "Files"
RgbPath "/usr/share/X11/rgb"
ModulePath "/usr/lib/xorg/modules"
FontPath "Unix/:7100
FontPath "built-ins"
EndSection

Section "Module"
Load "Glcore"
Load "extmod"
Load "vnc"
Load "dri"
Load "dbe"
Load "glx"
Load "xtrap"
Load "record"
EndSection
Section "InputDevice"
Identifier "keyboard"
Driver "kbd"
EndSection

Section "InputDevice"
Identifier "Mouse0"
Driver "Mouse"
Option "Protocol" "auto"
Option "Device" "/dev/input/mice"
Option "ZAxis Mapping" "4 5 6 7"
EndSection

Section "Monitor"
#Displyzise 330 210 mm
Identifier "Monitor"
VendorName "SEC"
ModelName "3633"
EndSection

Section "Device"
Identifier "Card0"
Driver "i810"
VendorName "Intel Corporation"
BoardName "Mobile 945GM/GMS/940GML Express Integrated Graphics Controller"
BusID "PCI:0:2:0"
EndSection

Section "Screen"
Identifier "Screen0"
Device "Card0"
Monitor "Monitor0"
SubSection "Disply"
Viewpoint 0 0
Depth 1
EndSubSection
SubSection "Display"
Viewpoint 0 0
Depth 4
EndSubSection
SubSection "Display"
Viewpoint 0 0
Depth 8
EndSubSection
SubSection "Display"
Viewpoint 0 0
Depth 15
EndSubSection
SubSection "Display"
Viewpoint 0 0
Depth 16
EndSubSection
SubSection "Display"
Viewpoint 0 0
Depth 24
EndSubSection
EndSection

output for " X -configure " command is :

Intel
ark
r128
trident
amd
hsc
vmware
glint
fbdev
vesa
(EE) LoadModule: Module ztv does not have a ztvModuleData data object
(EE) Failed to load module "ztv" (invalid module, 0)
(++) Using config file: "/root/xorg.conf.new"
(ww) I810: No matching Device section for instance (BusID PCI:0:2:1) found
(II) Module already built-in
Xorg is not able to detect your mouse. Edit the file and correct the Devices.
Your xorg.conf file is /root/xorg.conf.new
To test the server, run 'X -config /root/xorg.conf.new

ls -l /dev/mouse
ls : cannot access /dev/mouse:No such file or directory
ls -l /dev/mouse0
crw-rw---- 1 root root 13, 32 2007-12-12 16:07 /dev/mouse0

ls -l /dev/mouse1
crw-rw---- 1 root root 13, 32 2007-12-12 16:07 /dev/mouse1

ls -l /dev/mouse2
crw-rw---- 1 root root 13, 32 2007-12-12 16:07 /dev/mouse2