broken mouse/ keyboard or bad power supply

Unfortunately you do not say what wattage your power supply is. A more likely reason would be that your USB ports are version 1.0 instead of 1.1 or 2.0 in which case your power supply may well be inadequate.

I would opt for buying a new computer. Technology changes rapidly and preferrably you should run a modern operating system on a modern machine.

One last point, Ubuntu 7.4 is obsolete, it is no longer supported. The next version, 7.10 is also obsolete. Try to get version 8.04 which is a Long Term Support (LTS) release supported until April, 2011.

You didn't tell us whether the machine is a netbook/laptop or a standard desktop machine. I'm going to assume that you have a desktop machine ...

I kinda agree with Andre about trying to get a slighly more recent machine, perhaps your uncle has something he no longer needs or a collection of parts which you might be able to put together? A brand-new top-end machine is hardly vital for linux but sometimes machines do appreciate upgrading parts. This is much easier with desktop machines but is also sometimes possible with laptops/netbooks.

Perhaps have a look around the bios to see if anything there makes sense and is causing a problem. If poking around inside you bios causes problems then in a desktop machine just take the small circular 'watch' battery out of the mbord for about a minute, if you ever have to replace an mbord battery then you have to swap them over in less than 30seconds to try to avoid losing settings so over 1 minute should be plenty of time to make sure that the bios goes back to defaults. There's some help on getting into yur bios in this guide, but the whole page was written for a different objective
https://help.ubuntu.com/community/BootFromCD#BIOS%20is%20not%20set%20to%20boot%20from%20CD%20or%20DVD%20drive

It might be worth trying a different keyboard/mouse combination. This is worth trying before getting a new power-supply because it's likely to be an easier/cheaper answer. If both the keyboard and mouse that you have are usb then one of them may only work in a usb2.0 slot while the other might be happy in a usb1.0 slot, perhaps that's why they both don't work at the same time. Often older machines (especially laptops/netbooks) had only 1 usb2.0 and 1 usb1.0, although if you haven't tried slots at the back of the machine then you might find another usb2.0 there as well, maybe. If swapping around which slot the mouse and keyboard are plugged into doesn't get both working then you might be able to borrow a pci card (assuming desktop machine again) that gives the machine a couple of usb2.0 slots. Alternatively you might be able to borrow a usb2.0 hub with it's own independent power-supply. If one of these works then you may need to hunt around for a cheap one worth buying, and then see how much your uncle would want to sell his for. It's not worth spending a lot on an old machine but sometimes just a little bit helps fix it right back up :)

If you haven't been able to get both the mouse and the keyboard working then it might be worth testing your uncles theory by unplugging the cd/dvd-drive's power lead, for once this is probably easier in a laptop. Either way make sure the machine is off at the wall socket as well as the machine itself. On the bottom of a laptop is often just a couple of screws holding the cd/dvd-drive in. Cd/dvd-drives tend to be square(ish) so it should be fairly easy to work out which 2 screws to undo. sometimes they make it even easier by having a sliding 'button' (its not really a button but that about as close as i know how to describe it). On a desktop machine it would mean either sliding the side panel off or finding the clever trick to opening the case without damaging it, touching the metal sides of the case should get rid of any static on your fingers. Also there's likely to be a lot of dust inside the machine and you might need a glass of water nearby ready to drink if you accidentally stir it all up and breathe some in. I'm fairly sure the dust iss harmless but it does make people cough and choke for a bit so try to keep the dust down. Don't spray with water or anything though, lol! I do use a vacuum cleaner or carefully pinch some of the dust balls and throw them in the bin fairly carefully. Then pull out the plug with 2black, 1yellow(maybe) & 1 red lead. This plug is usually quite tough to plug so be careful not to smash your hand into anything sharp or delicate when you unplug it. If your machine has a floppy drive unplug this also and anything else that looks like you can do without it for a little while, but not the main hard drive lol. Again in a desktop machine you might find the cage holding the cd/dvd-drive or other parts of the inside of the case have tricky and ingenious levers, carefully placed screws or something like that to help remove certain internal sections - again, mind your fingers because the edges can be quite sharp. So after unplugging one or two devices and making the case safe again it should be possible to get both keyboard and mouse working, because there's less power going to the things you've unplugged right? It would be good if you could tell us ho many Watts Output the power-supply has. This is usually labelled on the side of the power-supply inside the case, 350W or 450W is fairly normal. I use a graphics card, 5 or 6 fans, 2 cd/dvd-drives (sometimes) & 2 old hard-drives so i use quite a lot of power so i got a new power supply recently. I wanted an 850W but think i settled for 650W in the end. 650W should be fine unless i add loads of extra things. Newer drives seem to use less power, oddly, but Windows helped me break mine so i'm back to old drives, 10Gb and stuff like that!

Again if it does look likely that you'll need a newer power supply then it might be worth thinking twice and check out the price of power supplies because the chances are that it might be better to use that money to buy a slightly better computer. When i buy stuff i tend to try to buy something that i am likely to be able to use in a much better system, this way i only have to buy one replacement part at a time. Even when i bought a new mbord i was able to use my cd-drive and dvd-drive and hard-drives, fans etc from my old machine. I try to keep a second, older machine fixable and nearly functional although i wouldn't like to be stuck using it for long ;)

So don't lose the older machine you have. It's worth seeing how tough and expensive it's likely to be to get it working. Worst case scenario is getting a newer machine and then perhaps using some stuff from your old machine to improve the newer one, eg by giving using the hard-drive from the old one as a slave drive in the new one, the extra fans for Ram and chipset or for trying to pull air out of the case or for directing flow internally might help too. I prefer using my old cd-drive to reduce wear-and-tear on the newer dvd-drive ;)

Good luck and regards from
Tom :)

If you can get the mouse and keyboard working or even just with the mouse you might be able to download the much newer and still supported 8.04 or 9.04, either of which would be much better for your machine.

Simply put your 7.04 cd in the cd/dvd-drive and boot up from the cd. there's some familiar help here
https://help.ubuntu.com/community/BootFromCD

Choose the option "Try Ubuntu without changes to my machine" (or something like that), this should get you to a working desktop, we call this a "LiveCd session" - if it works ;) This should be able to surf the internet via your normal connection fairly easily as The bootup process looks around and configure itself for what it finds plugged into the machine. So just download 8.04 or 9.04 from
http://www.ubuntu.com/getubuntu/download
Do not attempt to update or even upgrade your 7.04 or else you'll have to reboot again. You'll need to make sure the download is saved to usb stick or onto internal hard-drive, doing both would be best. Iff you are going to save to usb stick then first make the usb stick bootable, and then add the iso or img file. Making a bootable usb stick would be the smartest move but there are other ways of installing Ubuntu
https://help.ubuntu.com/community/Installation#Installation%20without%20a%20CD

Personally, using a different machine, i would download a different distro at the same time - one that's designed to be able to run from inside Ram. My favourite is Wolvix Hunter
http://distrowatch.com/table.php?distribution=wolvix
but sliTaz is much tinier and so it often makes things easier, if i was using a cyber-cafe or had limited download time or something
http://distrowatch.com/table.php?distribution=slitaz
Hunter has much better games fo playing while waiting for tasks to complete :) Also has OpenOffice so the cd is usefull to carry around in case i need to use someone else's machine and don't want to get stuck in Windows ;) Anyway, this would, hopefully, allow me to use the cd/dvd-drive on my machine to make a cd of a newer Ubuntu
https://help.ubuntu.com/community/BurningIsoHowto
I find really cheap 'write-once' cd's much better for this rather than expensive dvd's or anything, mostly because the slower 'burn' speed helps but also if it goes wrong i don't care as much and can make another one fairly easily.

Installing from a newer Ubuntu Cd is a much better option than trying to install and use 7.04, even temporarily.

Good luck and regards from
Tom :)