Yes indeed copy mode as per the manpage, which i use frequently not for copy paste but simply for review.  And yes i typically run tmux in an xterm.

i haven't tweaked or created any config files for either xterm or tmux.  For xterm i use the following variables and aliases, occasionally the xt alias for starting an additional xterm, but more typically just the x alias to start X with a single xterm (from which i launch a window manager according to preference or need, usually twm, occasionally openbox).

      xk='xterm -bg black -fg white -xrm "*"'charClass:33:48,37-38:48,43:48,45-47:48,58:48,63-64:48,92:48,94:48,126:48  #doubleclick group ! %& + -./ : ?@ \ ^ ~
      xt=$xk\ -rightbar                                                                                                         #xk knoppix rxvt no -rightbar
alias xt="$xt&" 
alias xk="$xk&"
alias  x='startx /usr/bin/$xt'

For tmux i just use the following aliases, all 5 are identical except for setting the escape char to one of ^a ^q ^b ^x ^e, which i use for stacking sessions (eg my phone on the first level, ssh to my laptop on the next level, ssh to a server on the next level, ssh to other servers on the next level, etc).

alias ta='tmux h 2>/dev/null||tmux new -d;tmux bi w choose-w 2>/dev/null||tmux bi w choose-t -w;tmux set status off\; set visual-b on\; set display-t 9999\; set prefix ^A\; bi ^A last\; bi a send-p\; bi k killp\; bi . detac\; bi _ sp\; bi \| sp -h\; bi \" set status\; bi Tab selectp -t :.+\; a -d'
alias tq='tmux h 2>/dev/null||tmux new -d;tmux bi w choose-w 2>/dev/null||tmux bi w choose-t -w;tmux set status off\; set visual-b on\; set display-t 9999\; set prefix ^Q\; bi ^Q last\; bi q send-p\; bi k killp\; bi . detac\; bi _ sp\; bi \| sp -h\; bi \" set status\; bi Tab selectp -t :.+\; a -d'
alias tb='tmux h 2>/dev/null||tmux new -d;tmux bi w choose-w 2>/dev/null||tmux bi w choose-t -w;tmux set status off\; set visual-b on\; set display-t 9999\; set prefix ^B\; bi ^B last\; bi b send-p\; bi k killp\; bi . detac\; bi _ sp\; bi \| sp -h\; bi \" set status\; bi Tab selectp -t :.+\; a -d'
alias tx='tmux h 2>/dev/null||tmux new -d;tmux bi w choose-w 2>/dev/null||tmux bi w choose-t -w;tmux set status off\; set visual-b on\; set display-t 9999\; set prefix ^X\; bi ^X last\; bi x send-p\; bi k killp\; bi . detac\; bi _ sp\; bi \| sp -h\; bi \" set status\; bi Tab selectp -t :.+\; a -d'
alias te='tmux h 2>/dev/null||tmux new -d;tmux bi w choose-w 2>/dev/null||tmux bi w choose-t -w;tmux set status off\; set visual-b on\; set display-t 9999\; set prefix ^E\; bi ^E last\; bi e send-p\; bi k killp\; bi . detac\; bi _ sp\; bi \| sp -h\; bi \" set status\; bi Tab selectp -t :.+\; a -d'

One prospect is the bug might be related to window size change (it's one of the reasons i prefer tmux, screen will immediately drop copy mode in response to a window size change, thankfully tmux doesn't).  i recall several occurrences happening very soon after returning to a window from another.  in the meantime i might have changed the xterm size, or reattached from my phone, or rotated the phone...  But i think i've also seen it happen without any window size change, can't promise tho, i'll watch for further occurrences.

Let me know if there's more i can clarify or share with you.