After installing RHEL 5, including patch virt-manager 0.2.6-7.0.1.el5, the mouse behaves erratically inside the virtual client's window. It happens for RHEL as well as WINXP and WIN2003 clients. The mouse tends to hang constantly, having to "shake" it to un-stuck it. It will work from the bottom of the screen up until the middle, or from the left to the middle, etc, etc. I have replicated the behavior on my T60p laptop, and a rackmount system at the customer site.
*** This bug has been marked as a duplicate of bug 439048 ***