The issue is with Compiz. Create a folder named "default" in ~/.icons. Then 
create a file called "index.theme" and include the following text. Make sure to 
change "Name=" and "Inherits=" to the cursor of choice. Save and reload window 
manager. This is only a workaround but it will make your cursor work in both 
Gnome and GDM.
In Appearance Preferances be sure to change your pointer to default. Click on 
the theme tab, customize, pointer tab, and select default pointer.

[Icon Theme]
Name=
Comment=
Inherits=
[Desktop Entry]
Name[en_US]=index.theme

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Cursor theme in appearance preferences does not change when compiz is enabled.
https://bugs.launchpad.net/bugs/356309
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