Jeff, its good to see you got something going at least. It always pays to start simple then get more complex. As for the cpu or comms not fast enough - how do you know this? Some basic calcs will tell you if you have no hope or if you're in the ballpark. Going to USB won't necesarily solve your problem - maybe it will create more - one would normally use a serial to USB converter or chip, so you're still using the uart. Some chips have built in USB, but thats a whole load more problem than you need.

With your simple serial protocol, what stops the position value being the same value as 'X'? What would happen if it is? This may explain some of your problems. A protocol like MIDI may be an easy answer - all commands are from 80h onwards, data is 0-7fh. For your comms you could have something like 80h,x,y where x,y are the values 0-127.