I had an older VM with an older version of Parallel tools installed and the mouse synchronization worked well. I was able to move my mouse outside of the Parallels window and back in and the Windows mouse cursor worked as expected. However, upgrading to the latest version of the Parallel tools included in RC 2 causes the OS X cursor to appear on top of the Windows cursor once the cursor was moved outside of and then back into the Parallels window. I thought this was a bug with the RC 2 build until I saw that the older tool installation worked fine. Mike
So apparently I was just wrong. Today, I took that same older VM booted it up and the cursor issue is present there as well. It appears not to be an issue with the Tools per se, but a larger issue with the RC2 build. Mike