VMWare and Server 2008 R2 = Jumpy mouse

This is a known issue to VMware now and they are in the process of creating a new KB for the workaround.

Here is how to fix jumpy mouse for Windows 2008 R2:

After you install VMware Tools, reboot, login and your screen will be jumpy.

The VMware Tools install should have created the folder: C:/Program Files/Common Files/VMware/Drivers/wddm_video

browse to your Device Manager, choose your video adapter, right click, and "Update Driver". Browse to the folder listed above, reboot. At this point it should be fixed. If it is not fixed, shutdown your VM, go to edit settings, click on Video, and verify is has 8MB of Memory for Video. You may also need to verify this in the BIOS.

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