Your problem is that you have Normal Frameskipping set to ON. You need to have Frameskipping OFF and Use Old Frameskipping ON. This will fix the cursor glitch.
I have been extensively playing with FF7's settings recently and i think i've found the best possible settings for music and playablility. There is some occasional slight slowdown during battle (ie. lots of poly's when limit breaking, summoning) but the music is usually pretty spot on and it plays damn close to perfect.
BIOS Mode: BIOS File
Core Version: 1.4
GPU: 1.16
SPU: 1.9
Graphics Fixes: All OFF except for Old Frame Skipping ON and Framelimit ON
CPU Fixes: All OFF. I haven't noticed any difference with any of them ON.
SPU Fixes: XA Sound On. Reverb: Best/Slowest. Interpolation: Cubic/Slow. Sound Timer: Original. Wait CPU: Off.
Throttle Method: Fixed.
These settings have got me playing FF7 (NTSC) at 100% 95% of the time. It's really enjoyable and the music is crisp and nice. Framerate drops every now and again but i can't do much about that. Some sound effects are a bit squiffy (trains sound squealy) but perfectly liveable.
I'm going to start work on getting FF9 up and running perfectly soon and will report back my findings.
One point about this is that in order to run at full speed it NEEDS the 1.4 core. This means savestates won't work. You can however use a hotkey-assigned savestate (Black+LTrigger works for me) and that will save and load fine. There is a bug that certain cores can't save from the menu. This is the fix
