I have the same problem with Microsoft Arc Touch. The "wheel" will stop working, and I have to "turn it off" and then turn it back on to get the wheel to respond again. The troubleshooting tips don't give a tip for a permanent fix to the problem.
It's obvious that there isn't a working solution to this - even after three years. Why is Microsoft evading this issue altogether if this is a problem for so many people? I wish I had seen this before I bought the thing! I think next time I buy anything computer related, I'm going to Apple!