I had some extra time to test a few ideas I had to isolate the issue, I hope they help.
1. Does the issue occur on any particular display?: No, occurrs on both HDMI and DVI displays. works fine on the laptop display.
2. Since I have two "video cards" (1) an integrated Intel "HD", and (1) Nvidia GT 555M GPU. Is it a certain GPU?
- first I disabled the Integrated display adapter and re-ran both WMC and BF3, Similar issue in Full screen mode, Black display, but this time the curser doesn't blick, just a solid white mouse curser. Switching between primary displays made no difference. Windows performed poorly and reboot caused all sorts of issues. definately be super cautious about trying this.
- Second I disabled the Nvidia GPU and just ran on the Intel integrated GPU, by disabling the Drivers for the Nvidia card in Device Manager. monitors flickered for a bit and then I then the displays were normal. I ran WMC and what do you know, opened in full screen normally (the integrated GPU really struggled) keeping up drawing the screen and moving the through options. I also ran BF3 in full screen correctly (again, the integrated GPU stinks).
So, this appears to be a problem between the NVIDIA GPU drivers and the DisplayLink Drivers?