I really would suggest against trying to run SOHO on a machine with only 48MB of RAM. You should use VL Light for such a machine. SOHO will be incredibly slow, always using your swap and in fact, may not even work at all.
About you serial mouse problem you need to edit the /etc/X11/xorg.conf file and change this stanza:
Option "Protocol" "microsoft"
Option "Device" "/dev/ttyS0"