I wrapped the drawing of steve inside of function drawSteve(). As you have been drawing steve starting with coorindate 250,200 i had to "undo" this by calling translate(-250,-200) so now you can just assume that drawSteve() always draws steve at coordinate 0,0 .

This is why inside of draw() function I use translate(mouseX, mouseY) to move "centre of coordinates" to where mouse is. Thus resulting in steve drawn where the mouse is.

2. //STEVE is a hybrid of Hitler, a duck, and a lego
3. 
   
4. void setup() {
5. size(500, 500);
6. smooth();
7. background(255);
8. strokeWeight(3);
9. frameRate(30);
10. 
    
11.   ellipseMode(CENTER);
12.   rectMode(CENTER);
13. 
    
14. }
15. 
    
16. void draw(){
17.     background(255);
18.     
19.     translate(mouseX, mouseY);
20.     drawSteve();
21. }
22. 
    
23. void drawSteve() {
24.   // because looks like everything here is shifted 250,200
25.   // we translate it back, so that top-left corner is 0,0
26.   translate(-250,-200);
27. //head
28. fill(#FAFF12);
29. rect(250, 200, 100, 100, 3, 6, 12, 18);
30. 
    
31. //hair
32. stroke(3);
33. fill(0);
34. ellipse(238, 150, 35, 15);
35. ellipse(265, 150, 45, 18);
36. ellipse(277, 150, 45, 18);
37. 
    
38. noStroke();
39. fill(0);
40. arc(232, 152, 25, 25, HALF_PI, PI);
41. fill(#AD343E);
42. arc(215, 152, 25, 25, HALF_PI, PI);
43. 
    
44. //eyes
45. 
    
46. noStroke();
47. fill(0);
48. arc(235, 200, 14, 14, 0, PI+QUARTER_PI, CHORD);
49. arc(265, 200, 14, 14, -2, PI+QUARTER_PI, CHORD);
50. 
    
51. //brows
52. stroke(15);
53. fill(0);
54. quad(225,185,235,175,230,180,245,190);//left brow
55. quad(260, 185, 270, 180, 275, 185, 260, 190); //right brow
56. 
    
57. //mouth
58. fill(#ff0000);
59. stroke(0);
60. strokeWeight(3);
61. ellipse(250, 227, 30, 35);
62. fill(0);
63. ellipse(250,227,25,15);
64. }
65. void mousePressed() {
66.   println("I am STEVE");
67.   println("One does NOT simply");
68.   println("Exit!");
69. }

/** 
 * Wall.E (v2.2)
 * by Victoria (2013/Aug)
 * mod GoToLoop
 * 
 * http://forum.processing.org/topic/
 * help-i-d-like-to-make-this-smoother-any-help-would-be-great-thanks
 *
 * http://forum.processing.org/topic/need-help-with-mousex-and-mousey
 *
 * http://studio.processingtogether.com/sp/pad/export/ro.9ck0KLYubLcZG/latest
 *
 * http://studio.processingtogether.com/sp/pad/export/ro.9bY07S95k2C2a/latest
 * http://studio.processingtogether.com/sp/pad/export/ro.9lSicL0a3WMfi/latest
 */

final static int NUM = 1000, DIM = 3, SPD = 10, FPS = 60;
final static float CHANCE = .1;

final static short[] starX = new short[NUM];
final static short[] starY = new short[NUM];
final static color[] starC = new color[NUM];

static PImage robotImg;

static int x, y;     // positions
static int w, h;     // dimensions
static int ww, hh;   // radii
static int gw, gh;   // (canvas - radii)

static boolean north, south, west, east;

void setup() {
  size(800, 600);
  frameRate(FPS);
  noSmooth();
  strokeWeight(DIM);
  imageMode(CENTER);

  for (int i = 0; i != NUM; i++) {
    starX[i] = (short) random(width);
    starY[i] = (short) random(height);
    starC[i] = (color) random(0200, 0400);
  }

  robotImg = createRobot();
  initVars(width, height);
}

void draw() {
  background(0);

  for (int i = 0; i != NUM; i++) {
    if (random(1) < CHANCE)   starC[i] = (color) random(0200, 0400);
    stroke(starC[i]);
    point(starX[i], starY[i]);
  }

  moveRobot();
  confineToEdges();

  image(robotImg, x, y);
}

void keyPressed() {
  setDirection(keyCode, true);
}

void keyReleased() {
  setDirection(keyCode, false);
}

static final void setDirection(int k, boolean decision) {
  if      (k == UP    | k == 'W')   north = decision;
  else if (k == DOWN  | k == 'S')   south = decision;
  else if (k == LEFT  | k == 'A')   west  = decision;
  else if (k == RIGHT | k == 'D')   east  = decision;
}

static final void moveRobot() {
  x += (east?  SPD : 0) - (west?  SPD : 0);
  y += (south? SPD : 0) - (north? SPD : 0);
}

static final void confineToEdges() {
  x = constrain(x, ww, gw);
  y = constrain(y, hh, gh);
}

static final void initVars(int wdt, int hgt) {
  x = wdt>>1;            // position @ center of screen 
  y = hgt>>1;

  w = robotImg.width>>2; // robot dimensions
  h = robotImg.height;

  ww = w>>1;             // distances from center (radii)
  hh = h>>1;

  gw = wdt - ww;         // diff. of (canvas dimensions - obj. radii)
  gh = hgt - hh;
}

// MY CUSTOM FUNCTION FOR MY ROBOT I CALL IT LIKE THIS: robot();
PImage createRobot() {
  final PGraphics pg = createGraphics(400, 250, JAVA2D);

  pg.beginDraw();
  pg.smooth();
  pg.background(0, 0);

  //body
  //1stpointx,1y,2ndpointx,2pointy,x3ypoint
  //      \    \    \      /      /  \
  pg.fill(#3A3535);
  pg.triangle(180, 210, 155, 185, 155, 220);//leg gear left big triangle
  pg.fill(#3A3535);
  pg.triangle(240, 210, 265, 185, 265, 220);//leg gear right big triangle
  pg.fill(#ffffff);
  pg.rect(110, 140, 40, 100);//leftleg done
  pg.fill(#fdc145);
  pg.rect(205, 50, 10, 30);//neckjoint done
  pg.fill(#dea52e);
  pg.rect(150, 80, 120, 120);//body done
  pg.fill(#ffffff);
  pg.rect(270, 140, 40, 100);//rightleg done
  pg.fill(#a47b24);
  pg.rect(168, 20, 40, 30);//lefthead done
  pg.fill(#c8c8c8);
  pg.rect(170, 22, 36, 26);//leftheadlining
  pg.fill(#a47b24);
  pg.rect(212, 20, 40, 30);//righthead done
  pg.fill(#c8c8c8);
  pg.rect(214, 22, 36, 26);//rightheadlining
  pg.fill(#a47b24);
  pg.rect(150, 75, 34, 5);//shoulderleft
  pg.fill(#a47b24);
  pg.rect(236, 75, 34, 5);//shoulderright
  pg.fill(#d7d7d7);
  pg.rect(186, 76, 48, 4);//buttonholder
  pg.fill(#666666);
  pg.rect(188, 74, 6, 2);//button1
  pg.fill(#666666);
  pg.rect(196, 74, 6, 2);//button2
  pg.fill(#666666);
  pg.rect(204, 74, 6, 2);//button3
  pg.fill(#666666);
  pg.rect(225, 74, 6, 2);//button4
  pg.fill(#a47b24);
  pg.rect(150, 184, 120, 16);//bodydetail4
  pg.fill(#fdc145);
  pg.rect(155, 110, 110, 90);//bodydetail5
  pg.stroke(#fdc145);
  pg.fill(#dea52e);
  pg.rect(179, 120, 5, 35);//bodydetail1
  pg.fill(#dea52e);
  pg.rect(209, 120, 5, 35);//bodydetail2
  pg.fill(#dea52e);
  pg.rect(239, 120, 5, 35);//bodydetail3
  pg.stroke(#000000);

  //console
  pg.fill(#c8c8c8);
  pg.rect(150, 80, 120, 30);//console done
  pg.fill(#c8c8c8);
  pg.rect(185, 80, 50, 30);//innerconsole
  pg.fill(#c8c8c8);
  pg.rect(187, 82, 21, 26);//fanlining
  pg.fill(#c8c8c8);
  pg.rect(213, 80, 22, 30);//screenlining
  pg.fill(#676767);
  pg.rect(189, 84, 17, 10);//fan
  pg.fill(#9d9d9d);
  pg.rect(191, 96, 6, 10);//buttonlining
  pg.fill(#b73b3b);
  pg.rect(192, 98, 4, 5);//redbutton
  pg.fill(#b73b3b);
  pg.ellipse(194, 101, 3, 3);//redbutton
  pg.stroke(#676767);
  pg.fill(#676767);
  pg.rect(189, 84, 17, 2);//fanlines1hori
  pg.fill(#c8c8c8);
  pg.rect(189, 86, 17, 2);//fanlines2hori
  pg.fill(#676767);
  pg.rect(189, 88, 17, 2);//fanlines3hori
  pg.fill(#c8c8c8);
  pg.rect(189, 90, 17, 2);//fanlines4hori
  pg.fill(#c8c8c8);
  pg.rect(193, 84, 2, 10);//fanlines1verti
  pg.fill(#c8c8c8);
  pg.rect(199, 84, 2, 10);//fanlines1verti
  pg.fill(#222222);
  pg.stroke(#000000);
  pg.rect(215, 82, 18, 26);//screen
  pg.stroke(#9d9d9d);
  pg.fill(#9d9d9d);
  pg.rect(236, 100, 33, 3);//consoleright1
  pg.fill(#9d9d9d);
  pg.rect(236, 87, 33, 3);//consoleright2
  pg.fill(#9d9d9d);
  pg.rect(151, 100, 33, 3);//consoleleft1
  pg.fill(#9d9d9d);
  pg.rect(151, 87, 33, 3);//consoleleft2
  pg.stroke(#000000);

  //right leg detail-complete
  pg.fill(#b6b6b6);
  pg.rect(270, 140, 40, 8);//line1
  pg.fill(#b1b1b1);
  pg.rect(270, 148, 40, 8);//line2
  pg.fill(#acacac);
  pg.rect(270, 156, 40, 8);//line3
  pg.fill(#a3a3a3);
  pg.rect(270, 164, 40, 8);//line4
  pg.fill(#9a9a9a);
  pg.rect(270, 172, 40, 8);//line5
  pg.fill(#8c8c8c);
  pg.rect(270, 180, 40, 8);//line6
  pg.fill(#818181);
  pg.rect(270, 188, 40, 8);//line7
  pg.fill(#767676);
  pg.rect(270, 196, 40, 8);//line8
  pg.fill(#6a6a6a);
  pg.rect(270, 204, 40, 8);//line9
  pg.fill(#5e5e5e);
  pg.rect(270, 212, 40, 8);//line10
  pg.fill(#505050);
  pg.rect(270, 220, 40, 8);//line11
  pg.fill(#494949);
  pg.rect(270, 228, 40, 8);//line12
  pg.fill(#3f3f3f);
  pg.rect(270, 236, 40, 8);//line13
  //1stpointx,1y,2ndpointx,2pointy,x3ypoint
  //      \    \    \      /      /  \
  pg.fill(#2C2828);
  pg.triangle(240, 210, 265, 210, 265, 225); //bottom triangle gear right
  pg.rect(260, 210, 10, 13);
  //1stpointx,1y,2ndpointx,2pointy,x3ypoint
  //      \    \    \      /      /  \

  //left leg detail-complete
  pg.fill(#b6b6b6);
  pg.rect(110, 140, 40, 8);//line1
  pg.fill(#b1b1b1);
  pg.rect(110, 148, 40, 8);//line2
  pg.fill(#acacac);
  pg.rect(110, 156, 40, 8);//line3
  pg.fill(#a3a3a3);
  pg.rect(110, 164, 40, 8);//line4
  pg.fill(#9a9a9a);
  pg.rect(110, 172, 40, 8);//line5
  pg.fill(#8c8c8c);
  pg.rect(110, 180, 40, 8);//line6
  pg.fill(#818181);
  pg.rect(110, 188, 40, 8);//line7
  pg.fill(#767676);
  pg.rect(110, 196, 40, 8);//line8
  pg.fill(#6a6a6a);
  pg.rect(110, 204, 40, 8);//line9
  pg.fill(#5e5e5e);
  pg.rect(110, 212, 40, 8);//line10
  pg.fill(#505050);
  pg.rect(110, 220, 40, 8);//line11
  pg.fill(#494949);
  pg.rect(110, 228, 40, 8);//line12
  pg.fill(#3f3f3f);
  pg.rect(110, 236, 40, 8);//line13
  //1stpointx,1y,2ndpointx,2pointy,x3ypoint
  //      \    \    \      /      /  \
  pg.fill(#2C2828);
  pg.triangle(155, 225, 155, 210, 180, 210); //bottom triangle gear left
  pg.rect(150, 210, 10, 13); //rect gear left

  //TRACKS
  //1stpointx,1y,2ndpointx,2pointy,x3ypoint
  //      \    \    \      /      /  \
  pg.fill(#000000);
  pg.triangle(113, 146, 118, 142, 124, 146);//line1track1
  pg.fill(#000000);
  pg.triangle(132, 146, 138, 142, 144, 146);//line1track2
  pg.fill(#000000);
  pg.triangle(113, 154, 118, 150, 124, 154);//line2track1
  pg.fill(#000000);
  pg.triangle(132, 154, 138, 150, 144, 154);//line2track2
  pg.fill(#000000);
  pg.triangle(113, 162, 118, 158, 124, 162);//line3track1
  pg.fill(#000000);
  pg.triangle(132, 162, 138, 158, 144, 162);//line3track2
  pg.fill(#000000);
  pg.triangle(113, 170, 118, 166, 124, 170);//line4track1
  pg.fill(#000000);
  pg.triangle(132, 170, 138, 166, 144, 170);//line4track2
  pg.fill(#000000);
  pg.triangle(113, 178, 118, 174, 124, 178);//line5track1
  pg.fill(#000000);
  pg.triangle(132, 178, 138, 174, 144, 178);//line5track2
  pg.fill(#000000);
  pg.triangle(113, 186, 118, 182, 124, 186);//line6track1
  pg.fill(#000000);
  pg.triangle(132, 186, 138, 182, 144, 186);//line6track2
  pg.fill(#000000);
  pg.triangle(113, 194, 118, 190, 124, 194);//line7track1
  pg.fill(#000000);
  pg.triangle(132, 194, 138, 190, 144, 194);//line7track2
  pg.fill(#000000);
  pg.triangle(113, 202, 118, 198, 124, 202);//line8track1
  pg.fill(#000000);
  pg.triangle(132, 202, 138, 198, 144, 202);//line8track2
  pg.fill(#000000);
  pg.triangle(113, 210, 118, 206, 124, 210);//line9track1
  pg.fill(#000000);
  pg.triangle(132, 210, 138, 206, 144, 210);//line9track2
  pg.fill(#000000);
  pg.triangle(113, 218, 118, 214, 124, 218);//line10track1
  pg.fill(#000000);
  pg.triangle(132, 218, 138, 214, 144, 218);//line10track2
  pg.fill(#000000);
  pg.triangle(113, 226, 118, 222, 124, 226);//line11track1
  pg.fill(#000000);
  pg.triangle(132, 226, 138, 222, 144, 226);//line11track2
  pg.fill(#000000);
  pg.triangle(113, 234, 118, 230, 124, 234);//line12track1
  pg.fill(#000000);
  pg.triangle(132, 234, 138, 230, 144, 234);//line12track2
  pg.fill(#000000);
  pg.triangle(113, 242, 118, 238, 124, 242);//line13track1
  pg.fill(#000000);
  pg.triangle(132, 242, 138, 238, 144, 242);//line13track2.

  pg.fill(#000000);
  pg.triangle(273, 146, 278, 142, 284, 146);//line1track1
  pg.fill(#000000);
  pg.triangle(292, 146, 297, 142, 303, 146);//line1track2
  pg.fill(#000000);
  pg.triangle(273, 154, 278, 150, 284, 154);//line2track1
  pg.fill(#000000);
  pg.triangle(292, 154, 297, 150, 303, 154);//line2track2
  pg.fill(#000000);
  pg.triangle(273, 162, 278, 158, 284, 162);//line3track1
  pg.fill(#000000);
  pg.triangle(292, 162, 297, 158, 303, 162);//line3track2
  pg.fill(#000000);
  pg.triangle(273, 170, 278, 166, 284, 170);//line4track1
  pg.fill(#000000);
  pg.triangle(292, 170, 297, 166, 303, 170);//line4track2
  pg.fill(#000000);
  pg.triangle(273, 178, 278, 174, 284, 178);//line5track1
  pg.fill(#000000);
  pg.triangle(292, 178, 297, 174, 303, 178);//line5track2
  pg.fill(#000000);
  pg.triangle(273, 186, 278, 182, 284, 186);//line6track1
  pg.fill(#000000);
  pg.triangle(292, 186, 297, 182, 303, 186);//line6track2
  pg.fill(#000000);
  pg.triangle(273, 194, 278, 190, 284, 194);//line7track1
  pg.fill(#000000);
  pg.triangle(292, 194, 297, 190, 303, 194);//line7track2
  pg.fill(#000000);
  pg.triangle(273, 202, 278, 198, 284, 202);//line8track1
  pg.fill(#000000);
  pg.triangle(292, 202, 297, 198, 303, 202);//line8track2
  pg.fill(#000000);
  pg.triangle(273, 210, 278, 206, 284, 210);//line9track1
  pg.fill(#000000);
  pg.triangle(292, 210, 297, 206, 303, 210);//line9track2
  pg.fill(#000000);
  pg.triangle(273, 218, 278, 214, 284, 218);//line10track1
  pg.fill(#000000);
  pg.triangle(292, 218, 297, 214, 303, 218);//line10track2
  pg.fill(#000000);
  pg.triangle(273, 226, 278, 222, 284, 226);//line11track1
  pg.fill(#000000);
  pg.triangle(292, 226, 297, 222, 303, 226);//line11track2
  pg.fill(#000000);
  pg.triangle(273, 234, 278, 230, 284, 234);//line12track1
  pg.fill(#000000);
  pg.triangle(292, 234, 297, 230, 303, 234);//line12track2
  pg.fill(#000000);
  pg.triangle(273, 242, 278, 238, 284, 242);//line13track1
  pg.fill(#000000);
  pg.triangle(292, 242, 297, 238, 303, 242);//line13track2.

  // to create the tracks I added 8 to all the y's number 
  // to create the y value for the tracks
  // so I could repeatedly get the exact same shape 
  // I need and the positioning. 
  // 2nd point triangle add 8 to y value.

  //arms
  pg.fill(#fdc145);
  pg.rect(100, 110, 50, 20);//leftupperarm done
  pg.fill(#fdc145);
  pg.rect(270, 110, 50, 20);//rightupperarm done
  pg.fill(#acacac);
  pg.rect(65, 113, 35, 13);//leftlowerarm done
  pg.fill(#acacac);
  pg.rect(320, 113, 35, 13);//rightlowerarm done
  pg.fill(#acacac);
  pg.rect(355, 114, 15, 10);//rightwrist
  pg.fill(#acacac);
  pg.rect(52, 114, 13, 10);//leftwirst
  pg.fill(#acacac);
  pg.rect(371, 105, 26, 12);//righthand1
  pg.fill(#acacac);
  pg.rect(371, 105, 13, 12);//righthand1.1
  pg.fill(#acacac);
  pg.rect(371, 120, 26, 12);//righthand2
  pg.fill(#acacac);
  pg.rect(371, 120, 13, 12);//righthand2.1
  pg.fill(#acacac);
  pg.rect(371, 115, 16, 8);//righthand3
  pg.fill(#acacac);
  pg.rect(24, 105, 26, 12);//lefthand1
  pg.fill(#acacac);
  pg.rect(24, 105, 13, 12);//lefthand1.1
  pg.fill(#acacac);
  pg.rect(24, 120, 26, 12);//lefthand2
  pg.fill(#acacac);
  pg.rect(24, 120, 13, 12);//lefthand2.1
  pg.fill(#acacac);
  pg.rect(35, 115, 16, 8);//lefthand3

  //head-complete
  pg.fill(#000000);
  pg.ellipse(194, 34, 20, 20);//eyeleft
  pg.ellipse(204, 25, 1, 1);//screw1
  pg.ellipse(174, 25, 1, 1);//screw2
  pg.ellipse(173, 44, 1, 1);//screw3
  pg.fill(#000000);
  pg.ellipse(226, 34, 20, 20);//eyeright
  pg.ellipse(217, 25, 1, 1);//screw1
  pg.ellipse(247, 25, 1, 1);//screw2
  pg.ellipse(247, 44, 1, 1);//screw3
  pg.fill(#a47b24);
  pg.ellipse(210, 39, 4, 8);//eyeconnecter
  pg.stroke(#330542);
  pg.fill(#330542);
  pg.ellipse(194, 34, 16, 16);//eyeleftrim
  pg.ellipse(226, 34, 16, 16);//eyerightrim
  pg.stroke(#7f6e85);
  pg.fill(#7f6e85);
  pg.ellipse(226, 34, 10, 10);//eyerightiris
  pg.ellipse(194, 34, 10, 10);//eyeleftiris
  pg.stroke(#000000);
  pg.fill(#000000);
  pg.ellipse(194, 34, 6, 6);//eyeleftpupil
  pg.ellipse(226, 34, 6, 6);//eyerightpupil

  //logo-complete

  pg.rect(192, 184, 1, 7);//donew
  pg.rect(198, 184, 1, 7);//donew
  pg.rect(204, 184, 1, 7);//donew
  pg.rect(208, 184, 1, 9);//donea
  pg.rect(216, 184, 1, 9);//donea
  pg.rect(220, 184, 1, 7);//donel
  pg.rect(229, 184, 1, 7);//donel
  pg.rect(192, 192, 6, 1);//horiw
  pg.rect(199, 192, 6, 1);//horiw
  pg.rect(208, 184, 9, 1);//horia
  pg.rect(208, 188, 9, 1);//horia
  pg.rect(220, 192, 7, 1);//horil
  pg.rect(229, 192, 7, 1);//horil
  pg.stroke(#c42c29);
  pg.fill(#c42c29);
  pg.ellipse(254, 189, 16, 16);//eoutline
  pg.stroke(0);
  pg.fill(#000000);
  pg.ellipse(241, 188, 4, 4);//blackdot
  pg.stroke(#ffffff);
  pg.fill(#ffffff);
  pg.rect(250, 184, 1, 7);//e
  pg.fill(#ffffff);
  pg.rect(250, 184, 7, 1);//e
  pg.fill(#ffffff);
  pg.rect(250, 188, 7, 1);//e
  pg.fill(#ffffff);
  pg.rect(250, 192, 7, 1);//e

  pg.endDraw();
  return pg.get();
}