Comment 2 for bug 500725

Having this exact same issue. It's drawing me crazy... since I upgrade from 0.47. I'm using a Graphire Tablet (Sapphire, CTE-430) which as a pencil with two ends (eraser/pencil). I think it's related to that.

Everything is configured and working, but the selected tool gets really confused. If I want to just select an object and move it, I can do it with my mouse, but with the tablet it's apparently random. I can see the cursor (that new ugly cursor with a hand) appearing when it's in the right state, so I was able to try to reproduce it.

Essentially: the 'grab hand' mouse state doesn't activate unless a) I move the mouse using the trackpad, or b) I move the pen out of the tablet. So the workaround seems to be raising the pen an getting it closer to the tablet again.

Something very wrong was introduced between 0.47 and 0.48 relating to the way the cursor shape changes based on the input device in use.