NEW09 imac External Monitor causes mouse to freeze every 4 sec for half sec

I have a 2010 MacPro with the NVidia 7800 series card, dual monitors. One screen is connected via the direct DVI port, the other is connected thru the dorky little mini-dongle thing that costs the extra $30. When that 2nd display is connected, the mouse pulsing starts. When I yank the plug and run on a single display, all is well with the world. Plug it back in, displays come on-line and pulsing starts again. Dell 24" displays, they are identical models.

10.6.5 update does not resolve; booting 10.6.4 on the factory DVD does not solve. Zap PRAM does not solve. Nothing works... thought it was my magic mouse/bluetooth, but a hardline USB mouse does the same thing.

It's definitely this HDCP crap. Anyone find a setting or a kext that we can just dump to disable it? I could give a rat's behind about protected content, I can't use my freaking computer when I can't click the middle of my screen because the pointer surges to the corner!

The idea that we have to go VGA to stop this madness is bull something-or-other. These systems are expensive and need to work correctly. Need to get a bug filed about this and Apple needs to get on it.

10.6.6 applied, the insanity still continues. I found that by disconnecting the display for "a while" it would work until the next day. Turning off all the "green crap" (power save, display sleep, etc.) stopped it, though I hate running 230W 24x7x52 just to make my g'****** computer usable.

Same problem here. Even went so far as to blow hard drive and do a complete re-install. No go.

Why Apple has not fixed this yet is bad. DVI Out to Samsung 226CW monitor.
Total BS...

Just to add my two cents, I have seen this issue with my new iMac i7 2.93GHz. At first I though it was because I moved my home folder to an external drive (but that seemed daft). After going through this thread I have had a play and the issue only appears if I switch my external monitor (an Asus VH242) off or switch it to VGA mode. If I switch it to DVI mode or HDMI mode it works fine.

I am inclined to agree with some of the other posters here and this is related to some HDCP issue. Really disappointed that Apple haven't sorted this yet.

I just had this problem today after using an external monitor for months. I at first thought it was because I had installed an Apple TV on the network, but I also moved my playstation 3 to my office and hook it up to my external monitor's alternate HDMI port. And then I started getting the freezing mouse issue.

After reading the posts here, the ONLY thing that worked was power cycling the monitor. So I would have to agree it has something to do with the way the monitor communicates with the Mini Display Port.