1. If inserting USB has caused any issues, do not use that usb device and that port.
2. Most of the stuff happening can also be caused by a failling HDD or memory, check BIOS if HDD smart reporting is enabled it is quite good at figuring out when HDD is about to go belly up.
I just ended up reinstalling as I realized there was nothing to be lost and it would be faster in the end. Its working now with the USB mouse and keyboard that I suspected....
I will keep an eye out for this in the future, the other trigger could have been running the laptop very briefly on its battery, which is on its last legs and has a claimed 5 minutes of life at any given moment. So could have triggered some buried power save / hibernation type feature or just plain corrupted some files..