I'm glad to know I'm not the only one who has had this problem. . . a friend here at work came up with a crazy temporary solution. Whenever the mouse wheel would start making the screen pan, he would put his mouse arrow in the square at the ends of the display scroll bars in the drawing window (open up CAD and if you have these scroll bars displayed you will see the little square). He would scroll the mouse wheel a few times, and - TADA - it would zoom in the drawing again. Weird, huh? You should try this technique out sometime if the problem happens again.
mbuttonpan isn't the problem - this variable turns on/off panning when you press down on the mouse wheel button, not when you scroll with the mouse wheel.
THE REAL SOLUTION:
In the Control panel, select the scroll mouse and then go to the troubleshooter ... finally select the AutoCAD software and it will put it in the list of software to turn off the default Windows scroll mouse handler
Yeah - this solved the problem for me. Thanks Keith!