Strange Mouse Effects with Virtualbox

Since the latest updates to Virtualbox I've noticed a strange issue with the mouse pointer on the guest systems.

I usually run Linux VM guests but I've read reports that this can be  an issue with windows guests as well.  A very large and annoying pointer shadow appears on the screen:

I've googled all around and tried a few fixes but nothing works for me so far.  Plenty of other people seem to get this issue,  but there are no workarounds that have helped my situation.

The issue seems to vary in severity according to the mouse pointer scheme you choose,  with plain black pointers its much less pronounced but if you are using the chameleon cursor set you are really out of luck.

If anyone knows a fix: please let me know.