Did you do the usual general trouble-shooting?
Run Disk Utility and use the +Repair Disk Permissions+ on the startup volume.
When you restart, use the reset PRAM procedure.
If that does not help, try creating a new admin user account in System Preferences Accounts pane
Log out and log in to the new account. Does this same problem occur in the new account? If not, you have narrowed down the cause to something in your normal account. It could be some corrupted user preference setting, or some background process (perhaps something third party) that runs when you are logged into your normal account.
If it does occur in the new account too, restart using the Mac OS X installation disc. Insert the disc and restart with the C key held down to force a restart from the optical drive. When it gets to the Installer's first screen, don't go any further, but note if this problem still occurs (when you are booted from a different system).
I have conducted all the normal troubleshooting - disk utility, created new admin user, booted from Install disks, reset PRAM, cleaned using cron scripts, tried a different monitor. Same issue. Apple Tech Support asked me to send in a video displaying the issue. It has been weeks and haven't heard anything.
I have the exact machine, and the same issue, and it's a total pain. Whenever I just want to use the single iMac monitor I have to disconnect the other display for the dvi port.
I've read other places that it might be the ATI graphics card, which makes me wonder why I upgraded to the better card.
I just updated to Snow Leopard thinking they might have fixed, but no.
The problem is exactly how HappyNowSad said, as you move your mouse cursor across the screen, it will pause in place for a 0.5 second, then resume with your mouse motion. It's like the mouse connection interrupts and reconnects every 3 or 4 seconds.
Please patch this ASAP!
I can confirm this on my Late 2009 iMac i7. The Problems starts to occur suddenly after login in at the screensaver. I already changed the Mini Display Port to DVI Adapter (luckily i got 2) and the DVI cable.
With another Monitor the Problem is not existent, and if i attach the display to my MacBook the freezes do no happen too.
The Display is a Dell 2409W.
Die Problem even exists at the Login Page.
I have the same problem with my new iMac i7. I'm not able to use it with my external 23" LG monitor because this mouse freeze *****. Sometimes I can hardly hit the small,red close button.
But I only have this problem when the iMac was in standby with the external monitor. If I unplug it and then plug it in again the mouse pointer is fine.
It seems that Apple has not yet 'tamed' the ATI graphics card (flicker flicker, mouse freee, ...)
Same problem with brand new i7 iMac. Tested with a wired mouse, the magic mouse and a MS wireless mouse. Booted from DVD installation disk. Erased the HD and reinstalled the system, zapped the PRAM and made animal sacrifices. Spoke at length to the folks at Apple's help line (who knew nothing about this). Was about to take the machine back in for testing, but it sounds like this is not fixable until somebody comes up with a solution.
For what it's worth, I'm trying to connect a VewSonic 19inch monitor. Oh, yeah, and I tried several different cables.
today after awakening from Monitor Standby the problem occurred again.
It does not matter if its i wired or wireless mouse.
The Problem seems to be locate within the usb subsystem, because the Keyboard is affected too, here also the wired and the wireless keyboard are affected.
All of this devices are internally connected via USB i think. e.g. is the Bluetooh chip connected via USB to the system.
The isight is also connected via USB? The isight is not affected by this problem.
Message was edited by: buliwyf