Configuration: using VMware Workstation 10.0.2 (WS10) on Windows 8.1 host with two displays (internal and external via HDMI, both with same Full HD 1920x1080 resolution); with a Xubuntu 14.04 LTS guest.
Problem: when I have WS10 positioned on the Win 8.1 host external display (note: using Extended Desktop internal + external), the mouse doesn't work properly in the Xubuntu 14.04 guest (it seems off and flickers), hindering any further action in the guest using the mouse. However, when I drag WS10 to the other display (the internal display), then the mouse works properly in the guest OS; drag again to external display area and it doesn't behave any more.
Details host: VMware Workstation 10.0.2 build-1744117 on Windows 8.1 Pro, 64-bit (Build 9600) 6.3.9600; graphics: Intel HD Graphics 4000, driver v10.18.10.3621; cpu: i7-3537U, mem: 8 GB; internal display: digital, CMN15bb, 1920x1080 (60 Hz); external display: digital, AOC2269, 1920x1080 (60 Hz); there is also a NVIDIA GeForce GT 735M on the laptop, with GeForce 337.88 driver (though I think this graphics card is not at play in the issue described).
Details guest: Xubuntu 14.04 LTS installed using: File - New VM; custom, HW: WS10; iso:"...\xubuntu-14.04-desktop-i386.iso"; name: tst / user: tst (plus some password); VM name: tst; processors: 1/1/1 (defaults); mem: 1024 (default); NAT; I/O: LSI Logic; disk: SCSI, new virtual disk: 20 gb - split - tst.vmdk; installed using "Easy Install is installing Ubuntu" and following Xubuntu defaults; problem with mouse flicker/mispositioned occurs directly after first install (that is: already on the first login screen; and also logged in without applying the latest software updates after first login); and this problem remains after fully updating the guest OS (forced via terminal using "sudo apt-get update" and "sudo apt-get upgrade").
First seen using the "WS10, Edit, Preferences, Input, Cursor, Optimize mouse for games: Automatic" setting, changing this to "Never" didn't change the behaviour seen. However, changing this to "Always" did: the mouse pointer then quickly goes to the top left corner (when input is grabbed) and stays there when the VM guest is used on the second/external display... while working as expected on the first/internal display. Dragging the WS10 window (with the VM guest running on a tab) from one to the other clearly shows the different behaviour on the two displays. For those reproducing: use [Ctrl]+[Alt] to release the mouse from the grabbed state... as you might feel stuck in the VM otherwise.
In my opinion, this might be a regression; as I recall that my setup using the second/external display for the VM guests was working fine till about a week or so; now the regression could come from WS 10.0.2 or from updates to the graphics drivers and/or Windows 8.1 host... the above details are showing the latest greatest installed trying to resolve the issue by first updating all of the host (system) software; and in that process the host machine has had a few reboots, which didn't alter the problem/experience described.
