Cursor performance issues in Windows 7 when hardware acceleration is off is described in this new knowledge base document from Autodesk.
You are running AutoCAD 2010 up to AutoCAD 2013, AutoCAD LT or an AutoCAD-based vertical product in Windows 7 and are experiencing cursor performance issues or the cursor is jumping as if SNAP was enabled.
This issue only happens in Windows 7 and affects AutoCAD LT and all AutoCAD-based products where hardware acceleration has been turned off.
Enable Hardware Acceleration if possible. Use 3DCONFIG. Another method is to disable Aero effects on Windows 7. It is also recommended to in AutoCAD, turn off all Dynamic Input features, including dynamic prompts, by setting the DYNMODE system variable to 0. Full details are found here: TS14898223