Sorry, I'm at work, so I don't have the game in front of me. The wording may not be hardware mouse cursor. I'll look when I get home, in three hours. I looked for this problem in Yoda's help desk and there were several mice that have issues. Also, it looks like the options screen may change depending on what options are compatible with your computer. Maybe you don't have that option.
Here's a quote from Yoda's help desk:
When using an input device with older drivers, your mouse cursor may drift or lose input on the game's menu screens. If this occurs, please download and install the latest drivers available for your mouse from the manufacturer's website.
If you have a joystick or gamepad connected to the system, and you plan to play the game using the keyboard and mouse, you may want to try disconnecting the joystick or gamepad from the system temporarily to see if this corrects the issue. You may need to test and calibrate your controller in the Windows Gaming Options Control Panel to correct this.
Here's another Yoda quote:
If you experience any issues when using a Logitech mouse, we recommend that you install Logitech Mouseware driver version 9.79.1, which may correct these issues.
Maybe that will help. If not, here's a link to the help desk FAQ section, there's lots of stuff about mice and video cards:
http://yodashelpdesk.lucasarts.com/faq.asp?sid=161422060223198070194002&pid=1491&pnm=Star%20Wars%20Empire%20at%20War&seid=4044&pos=Windows%20XP&top=All)
I found a reference to the option I was talking about in the help area. It's called "hardware mouse". It should be at the bottom of the video options. Sorry about getting the name wrong before. :)