After upgrading a VM from Ubuntu 9.04 to Xubuntu 9.10 I noticed that the mouse cursor works fine in a certain region (say 640×480) but outside that region, it flickers between the actual mouse position and the edge of the region.
After reinstalling X a few times and upgrading the VMware tools I found the solution: it is a bug in the newer GTK versions. Since I amd running Gentoo (unstable aka bleeding edge) I am one of the lucky owners of this new bug.
The solution seems to be to instruct VMWare Player or Workstation (I use 6.5.x) to use its bundled GTK instead of the system one:
echo "VMWARE_USE_SHIPPED_GTK=yes" >> /etc/vmware/bootstrap