Keyboard works but mouse does not

The iPhone does not have the Mouse feature available by default. To turn it on, on the iPhone go to:

Settings | Accessibility | Touch | Assistive Touch

And turn on Assistive Touch. You will now see a mouse cursor on the iPhone and will be able to control it.

Would you be willing to test the next version of the app. There are significant changes to the Keyboard and Mouse handling, along with a better bluetooth setup. See the video below.