How is this trackpoint supposed to work?
The Wikipedia page has more information. The TrackPoint needs to be treated as a pair (X-Y) of strain gauges. That Wikipedia page also includes a link to a relevant patents with more info.



Updated - Here is some more info I found from my bookmarks:

The A-to-D conversion (encoding) from the analog TrackPoint signals into either a standard serial or (later) PS/2 mouse interface, was originally done by a separate MCU. Later this functionality was built into the keyboard controller.

The Sprintek SK7100 is one of the devices produced by various vendors, which interfaces a TrackPoint sensor to a serial or PS/2 mouse connection. That datasheet includes this reference schematic - the TrackPoint sensor is connected to J1 (upper right). The PS/2 mouse interface signals are on J2 (lower right):



I remember that some earlier interface devices were less integrated and used external op-amps between the TrackPoint sensor and the MCU. If you really want to make your own TrackPoint interface, rather than use one of the existing devices, then PCB layout is even more critical as the smallest amount of noise interferes with accurate force-detection. This problem is sometimes seen when people use non-original PSUs for their ThinkPad, and then find that the cursor starts to move on its own, due to the increased EMI (from the lower-quality PSU) affecting the analog TrackPoint signals.

As an aside, this interview on the Microsoft Research site with one of the original TrackPoint inventors, gives some interesting background regarding its development.