You are on dial up. You had an irq conflict between your mouse and your modem.
A classic problem seen more often on windows 95/98!
Com 1 cascades to 3, and 2 to 4. So if your mouse was on 3 and your modem on 1, your computer will freeze.
By moving the modem to a different slot, your irq changed for the modem.
And unfortunatly, windows xp likes to put all devices in what order it wants and leaves little room for playing. If I remember correctly, by manually setting an irq in xp, the os will say "FINE" and offer no more solutions to you - in other words you must configure everything yourself.
So you did the right thing - move to an empty slot and continue to allow xp to assign your device an address.
