Are those non functioning mouse buttons mapped as keyboard keys? If those are then its a "feature" of XIM, not SC.
The thing is, XIM can only take input to specific input type (Mouse, KB, Joystick, Controller ) from either device connected directly to XIM or a device through manager. Not both at the same time.
And this goes for the device input types, not the actual device used itself. It doesn't matter if it is a mouse sending keyboard reports. So now that you are pressing a key on a kb through SC, XIM will block all kb input from devices connected to the XIM directly.