This is what worked for me:

sudo gsettings set org.gnome.settings-daemon.plugins.cursor active false

If that doesn't work, please try this too:

sudo gsettings set org.gnome.settings-daemon.plugins.cursor active true

Courtesy:
https://bugs.launchpad.net/elementaryos/+bug/1430587/comments/14

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https://bugs.launchpad.net/bugs/402892

Title:
  Mouse cursor gets stuck in "drag and drop" mode

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