This bug began to trouble me since my upgrade from Slackware 13.1 to 13.37. But it is even worse when you have three monitors. I filled out a bug report on the AMD Unofficial Linux Bugzilla (Bug 117 - http://ati.cchtml.com/show_bug.cgi?id=117 ). I was looking for a definitive solution or even an workarround on this bug, but I had no luck...until now. Your suggestion on using software cursors solved my problem. I owe you!
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AMD Catalyst 11.5 Linux Driver Released