Scripting Issue With Top Down Mouse Movement

I have written a Script that will set the camera to a top down style view and have the character face the current mouse location and then move around with the WASD keys. When the camera gets rotated, the character will "loose track" of the mouse location and no longer faces it. If anyone knows why it's doing this and a solution I would really appreciate it.

Camera

 /* 
 © copyright 2013 Emerald Ink, All Rights Reserved
 */
 
 #pragma strict
 
 // The Camera this script should affect
 var cameraTransform : Transform;
 // The distance in the x-z plane to the target
 var distance = 4.0;
 // The height we want the camera to be above the target
 var height = 4.0;
 // Min and max values for the camera height
 var heightMin = 0.0;
 var heightMax = 8.0;
 // The speed at which the camera should rotate
 var rotateSpeed = 100.0;
 
 // How much we want to smooth the camera
 var heightDamping = 2.0;
 var sideDamping = 2.0;
 
 // The target we are following
 private var target : Transform;
 private var x = 0.0;
 
 function CameraZoom () {
     // Scroll in or out using the mouse wheel    
     if (Input.GetAxis("Mouse ScrollWheel") < 0)
     {
         if (height < heightMax)
         {
             height++;
         }
     }
     if (Input.GetAxis("Mouse ScrollWheel") > 0)
     {
         if (height > heightMin)
         {
             height--;
         }
     }
 
 }
 
 function CameraRotate () {
     if (Input.GetButton("Fire3")){
         x += Input.GetAxis("Mouse X") * rotateSpeed * 0.02;
     }    
 }
 
 function CameraSmooth () {
     // Calculations to smooth out the camera
     var wantedHeight = target.position.y + height;
     var wantedSide = target.position.x + distance;
         
     var currentHeight = cameraTransform.transform.position.y;
     //var currentSide = cameraTransform.transform.position.x;
 
     // Dampen the height
     currentHeight = Mathf.Lerp (currentHeight, wantedHeight, heightDamping * Time.deltaTime);
     
     // Set the position of the camera on the x-z plane to:
     // distance meters behind the target
     var rotation = Quaternion.Euler(0, x, 0);
     var position = rotation * Vector3(0.0, 0.0, -distance) + target.position;
     
     cameraTransform.transform.rotation = rotation;
     cameraTransform.transform.position = position;
     
     // Set the height of the camera
     cameraTransform.transform.position.y = currentHeight;
     
     // Always look at the target
     cameraTransform.transform.LookAt(target);
 }
 
 function SetTarget(newTarget : Transform) 
 {
     target = newTarget;
 }
 
 function Start () {
     if(!cameraTransform && Camera.main)
         cameraTransform = Camera.main.transform;
     if(!cameraTransform) {
         Debug.Log("Please assign a camera to the ThirdPersonCamera script.");
         enabled = false;    
     }
     
     target = transform;
     var angles = cameraTransform.transform.eulerAngles;
     x = angles.y;
     
 }
 
 function Update () {
     CameraZoom();
     CameraSmooth();
     CameraRotate();
     
 }

Character Controller / © copyright 2013 Emerald Ink, All Rights Reserved /

 #pragma strict
 
 // Can we control the character or not, during for example, a cut-scene.
 var isControllable : boolean = true;
 // Speed the player will move at.
 var speed : float = 6.0;
 // Speed the player will go upwards.
 var jumpSpeed : float = 8.0;
 // Speed at which the player will go downwards. Simulates gravity.
 var gravity : float = 20.0;
 
 private var inputRotation : Vector3;
 private var mouseLocation : Vector3;
 private var moveDirection : Vector3;
 private var moveSpeed : float;
 private var screenMiddle : Vector3;
 
 function LookAtCursor () {
     // The position of the middle of the screen.
     screenMiddle = Vector3(Screen.width * 0.5f,0,Screen.height * 0.5f);
     // Get the position of the mouse
     mouseLocation = Input.mousePosition;
  
     // Keep mouse location along the X,Z plane.
     mouseLocation.z = mouseLocation.y;
     mouseLocation.y = 0;
  
     // Rotates the player to face the mouse relative to the center of the screen.
     inputRotation = mouseLocation - screenMiddle;
     transform.rotation = Quaternion.LookRotation(inputRotation);
     
 }
 
 function Movement () {
     var controller : CharacterController = GetComponent(CharacterController);
     
     // Direction of Movement relative to the player's rotation.
     moveDirection = Input.GetAxis("Vertical")* transform.forward + Input.GetAxis("Horizontal") * transform.right;
     
     // Keeps WASD movement along the X,Z plane.
     moveDirection.y = 0f;    
     
     // Set the player's direction and move forward.
     moveDirection *= speed;
     
     // Move the player up while "Jump" is being held.        
     if (Input.GetKey(KeyCode.Space)) {
         moveDirection.y = jumpSpeed;
     }
     // Move the player down while "Crouch" is being held.
     if (Input.GetKey(KeyCode.LeftControl) || Input.GetKey(KeyCode.RightControl)){
         moveDirection.y = -jumpSpeed;
     }
     else {
         // Apply gravity
         moveDirection.y -= gravity * Time.deltaTime;
     }
     
     // Move the controller
     controller.Move(moveDirection * Time.deltaTime);
 }
 
 function Start () {
     
 }
 
 function Update () {
     if (!isControllable)
     {
         // kill all inputs if not controllable.
         Input.ResetInputAxes();
     }
 
     LookAtCursor();
     Movement();
     
 }

If you don't understand what I mean... Video