This bug was fixed in the package xorg-server - 2:1.11.4-0ubuntu10.7

---------------
xorg-server (2:1.11.4-0ubuntu10.7) precise-proposed; urgency=low

  * Re-enable 516-dix-dont-emulate-scroll-events-for-non-existing-axes.patch
    from upstream 1.12.2. Fixes the server from entering in an infinite
    loop in certain situations. (LP: #921236)
 -- Timo Aaltonen <[email protected]>   Thu, 02 Aug 2012 17:14:39 +0300

** Changed in: xorg-server (Ubuntu Precise)
       Status: Fix Committed => Fix Released

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https://bugs.launchpad.net/bugs/921236

Title:
  [12.04 Xorg, xserver 1.11.3] Dual monitor, after entering password,
  mouse pointer stuck on LHS of screen, no desktop.

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