Does it also happen if you run in the the Word safe mode: http://wordprocessing.about.com/od/troubleshootin1/qt/safemode.htm
And if you run in Windows safe mode?
Kees
Whenever I use Word (other apps and the desktop are fine) the mouse pointer constantly changes its appearance. This occurs so quickly that I can barely make out the different components. It seems to rotate/cycle between the standard thick white arrowhead, an I-shaped cursor with four small adjacent horizontal lines, and a blue circle. I first noticed this while using Word 2007 so I upgraded to Word 2010 but the problem persists. My OS is Win7 Professional.

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