I had a very similar problem when I upgraded my virtual machine to
Ubuntu 16.10.  My mouse and keyboard worked fine until I upgraded to
16.10.  The virtual machine would boot just fine, but I had no cursor
and no ability to click or type anything.  My mouse was being captured
by the VM, but not working at all.  Well I did realize I had the ability
to hold shift at boot to bring up the GRUB menu, so the virtual box was
working fine!  I figured the issue must be with Xorg.  I was able to
bring up a root shell and uninstall Xorg.  Apt was having issues
updating packages since it could not resolve name servers.  This somehow
caused Xorg to not come up at boot, which is when I also confirmed that
bash was also working fine.

TL;DR: Uninstalling and reinstalling Xorg has fixed my issue.

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You received this bug notification because you are a member of Kernel
Packages, which is subscribed to linux in Ubuntu.
https://bugs.launchpad.net/bugs/1630245

Title:
  after starting ubuntu 16.10 -- no keyboard, no mouse

Status in linux package in Ubuntu:
  Incomplete
Status in linux source package in Yakkety:
  Incomplete

Bug description:
  After starting Ubuntu 16.10 keyboard and mouse are dead. Since it
  works with an older kernel but not with the latest one, I'd assume the
  newer kernel does not initialize the devices the right way.

  ProblemType: Bug
  DistroRelease: Ubuntu 16.10
  Package: systemd 231-9git1
  ProcVersionSignature: Ubuntu 4.4.0-9136.55-generic 4.4.16
  Uname: Linux 4.4.0-9136-generic x86_64
  ApportVersion: 2.20.3-0ubuntu7
  Architecture: amd64
  Date: Tue Oct  4 15:27:52 2016
  InstallationDate: Installed on 2012-12-12 (1391 days ago)
  InstallationMedia: Ubuntu-Server 12.04.1 LTS "Precise Pangolin" - Release 
amd64 (20120817.3)
  Lsusb:
   Bus 001 Device 001: ID 1d6b:0002 Linux Foundation 2.0 root hub
   Bus 002 Device 003: ID 0e0f:0002 VMware, Inc. Virtual USB Hub
   Bus 002 Device 002: ID 0e0f:0003 VMware, Inc. Virtual Mouse
   Bus 002 Device 001: ID 1d6b:0001 Linux Foundation 1.1 root hub
  MachineType: VMware, Inc. VMware Virtual Platform
  ProcEnviron:
   TERM=screen
   PATH=(custom, no user)
   XDG_RUNTIME_DIR=<set>
   LANG=de_DE.UTF-8
   SHELL=/bin/bash
  ProcKernelCmdLine: BOOT_IMAGE=/vmlinuz-4.4.0-9136-generic 
root=/dev/mapper/test--tps--ubuntu--muc-root ro vga=789 consoleblank=0
  SourcePackage: systemd
  UpgradeStatus: Upgraded to yakkety on 2013-02-11 (1330 days ago)
  dmi.bios.date: 07/02/2015
  dmi.bios.vendor: Phoenix Technologies LTD
  dmi.bios.version: 6.00
  dmi.board.name: 440BX Desktop Reference Platform
  dmi.board.vendor: Intel Corporation
  dmi.board.version: None
  dmi.chassis.asset.tag: No Asset Tag
  dmi.chassis.type: 1
  dmi.chassis.vendor: No Enclosure
  dmi.chassis.version: N/A
  dmi.modalias: 
dmi:bvnPhoenixTechnologiesLTD:bvr6.00:bd07/02/2015:svnVMware,Inc.:pnVMwareVirtualPlatform:pvrNone:rvnIntelCorporation:rn440BXDesktopReferencePlatform:rvrNone:cvnNoEnclosure:ct1:cvrN/A:
  dmi.product.name: VMware Virtual Platform
  dmi.product.version: None
  dmi.sys.vendor: VMware, Inc.

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