I had the wddm driver installed but the mouse was still driving me crazy. Compared every setting on this guest with another in the same environment which worked OK. Tried changing from SVGA 3D to VGA II, lots of reboots, hardware acceleration set to max, all visual effects turned on, increased RAM to 16GB and 4 x CPU, moved host servers, played with all resolutions, windows updates. Nothing :-(
Then I went to Install/ Upgrade VMTools - Interactive Install - Repair. Rebooted guest and it's working fine now. Jeez, what a pulaver!!!