@Julian:  Does removing xserver-xorg-input-vmmouse from the client fix the 
issue?
Also, what cpu do you have?  I am wondering if this might be unique to AMD 
processors.

-- 
[lucid kvm-qemu]High cpu usage when moving mouse
https://bugs.launchpad.net/bugs/553081
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which is subscribed to xserver-xorg-input-vmmouse in ubuntu.

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