You may face this strange problem when you play a movie in VLC media player. Usually the mouse cursor disappears when you start your movie. If VLC suddenly stopped hiding the cursor, watch your other open programs, whatever you have running along with VLC. The mouse cursor may not disappear if uTorrent or the Task Manager is running, and/or Winamp is playing.
Do not try to reinstall VLC or even close uTorrent. Just right click on uTorrent’s icon at the system tray and select the “hide” option. When uTorrent is minimized to the system tray (not just to the taskbar), the mouse cursor as always disappears from VLC.
If Winamp is playing, you have also to stop Winamp (no need to minimize or hide it to the system tray).
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