DVI disconnect problems on Mountain Lion?

Running iMac 11,3 w os x 10.8.1 and 16gb Memory.

Prior to Mountian Lion i could hook up my windows laptop via dvi cable to display laptop screen on iMac. It was a perfect solution. Plug it in, windows displayed on my iMac screen. Unplug, back to normal iMac.

After upgrading to Mountain Lion, when unplugging, the dvi cable, the iMac screen becomes unreadable and blocky. System is unresponsive. Only rebooting will correct back to normal.

Anyone else seen this issue?

Thx!