Answer
This question was answered on August 27, 1999.
Much of the information contained herein may have changed since posting.
The following information was found on the microsoft website, It should be useful in solving your problem. The problem could be caused by either mouse or desktop themes, both the solutions are provided by microsoft.
If Your Mouse Pointers Flicker or Leave Trails When Using a Theme
On some displays, the mouse pointers in a desktop theme may flicker
or leave "trails" of dots behind them. To prevent this from
happening, use the Windows default pointers instead of the pointers
for your theme.
To use the Windows default pointers with a theme, make sure the Mouse
Pointers box is NOT checked when you apply the theme. If you are
already using a theme, you will need to restore your desktop to the
Windows default settings before you can use a theme with the Windows
default pointers.
To restore your desktop to the default settings, and then use the
default pointers with a theme:
1. Click the Start button, point to Settings, and then click Control
Panel.
2. Double-click the Desktop Themes icon.
3. In the Theme list, click "Windows Default," and then click Apply.
4. In the Theme list, click the theme you want to use.
5. Make sure the Mouse Pointers box is NOT checked, and then choose OK.
If Your Desktop Icons Look Blotchy
If you are using a desktop theme and your desktop icons don't look
right (they are too dark, blotchy, or the shadowing doesn't seem
right), try disabling some or all graphics acceleration for your
display.
To disable your display's graphics acceleration:
1. Click the Start button, point to Settings, and then click Control
Panel.
2. Double-click the System icon.
3. Click the Performance tab, and then click Graphics.
4. Move the Hardware Acceleration slider bar towards "None."