ungnu, Andy, and Martin, thanks for confirming the issue has gone away.
Closing as fixed.
** Changed in: xserver-xorg-video-intel (Ubuntu)
Status: Incomplete => Fix Released
** Changed in: xorg (Ubuntu)
Status: Incomplete => Fix Released
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[Gutsy] desktop and keyboard freezes while mouse is moveable
https://bugs.launchpad.net/bugs/138094
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