Magic Mouse not working with Lion

My Magic Mouse does not scroll with Lion. Preferences are set up correctly. What am I doing wrong? Thanks.

I've been using my Magic Mouse on and off this year, but it worked perfectly fine when I upgraded to 10.7.0. I haven't used the MM since my desk finally arrived today and in 10.7.2 vertical scrolling of the MM just won't work. It's so frustrating because of those iOS-like scrolling bars that vanish. It's SO HARD to find them to scroll and then my wrists are in an awkward position just forcing my mouse to scrolling vertically (by clicking, no gesture).
I have however noticed that when I put my MBA Rev A to sleep and wake it again, that vertical scrolling on my MM will work again for about 10 seconds. My batteries are at 100%, so it can't be that.
This absolutely *****! Apple's attention to detail on these small things have slipped. I even had an issue with iPhoto 11 the other day when I noticed that you literally have to jump through hoops to manually force face detection on photos that the application can't automatically detect on . That feature used to be so intuitive in iPhoto '09. Too many balls in the air, Apple?

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