Some notes of use to myself.
hardware cursor
software cursor

Who’s cursor … who’s window …

I get a lot of questions about how to do transparent top-level windows in Avalon, or nonrectangular windows, or layered windows, or other variations on the same theme.  The short answer is you can do most of these things, but it’s really a Win32 feature rather than an Avalon feature, and you’ll do it using Win32 APIs.  And some of this stuff works better on Longhorn, or at least will once we finish Longhorn.  But the complete answer is quite a bit more involved…link

http://bugs.sun.com/bugdatabase/view_bug.do?bug_id=4409306

This program (or any AWT program that makes use of automatic repaints)
* will cause excessive mouse and menu flicker on a W2K system. The
* problem does *not* exist in NT4.
*
* Start the program and watch the mouse cursor (wait a few seconds). The mouse
* will flicker. It doesn’t matter where the mouse is or if this program’s frame
* is activated. The mouse will always flicker when a portion of the time
* panel is visible on screen. (If the panel is obscured by another window,
* no flicker occurs.)

http://blogs.msdn.com/oldnewthing/archive/2006/11/21/1115695.aspx
The cursor-setting process is described in the documentation of the WM_SETCURSOR message:

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http://feebdack.com/magnifier

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alternate design choice :: AlphaBlend()
http://msdn.microsoft.com/library/default.asp?url=/library/en-us/gdi/bitmaps_6ig4.asp

CAPTUREBLT
Windows 98/Me, Windows 2000/XP: Includes any windows that are layered on top of your window in the resulting image. By default, the image only contains your window. Note that this generally cannot be used for printing device contexts.