I believe I have a work-around for this bug. My colleagues and I have
been experiencing this problem with our Dell optiplex 745s and ATI
cards. The cursor would not change when the mouse was on the right-hand
screen, though its position would change relative to its hotspot. If it
was a pointer on the left screen it would stay a pointer on the right
screen. If it was a grabby hand on the left it would stay that way on
the right. Returning the cursor to the left-hand screen would cause the
cursor to change to the correct icon.

My lspci shows:
01:00.0 VGA compatible controller: ATI Technologies Inc RV516 [Radeon 
X1300/X1550 Series]
01:00.1 Display controller: ATI Technologies Inc RV516 [Radeon X1300 Pro] 
(Secondary)

We are using the restricted ATI driver.

A fellow developer had this to say on our internal wiki:
"I got mine going with sudo aticonfig --initial=dual-head and doing a few edits 
in the resulting xorg.conf, like turning off Xinerama."

I will attach the xorg.conf that fixes the problem for me.

** Attachment added: "Working xorg.conf"
   http://launchpadlibrarian.net/8570002/xorg.conf

-- 
Mouse cursor 'sticks' on screen 2 of dual head display
https://bugs.launchpad.net/bugs/47885
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