That worked - BOTH Methods! The mouse is actually working in midnight commander thru screen now! Thank you very much.
Solution 1: (Spectrum)
type: screen
type: export TERM=xterm
then: mc
The export command allows mouse support in the putty terminal.
Solution 2: (Beckp) Seems to combine this into the screen command, so just start screen by
type: screen -T xterm
then: mc
It is so easy just to do one of the above, I have not tried to integrate it into a .screenrc file either.
Thank you both!