The cursor flickers whenever there is a semi-cinematic like when freeing Bizoo in clouds. Savegame at Clouds with enough equipment attached.
To recreate the problem, use the Spy-glass to look at the Stain. Behold the flickering.
ScummVM build: 1.2.0 REV 52800 win32
Game version: Goblins 3, CD/DOS/v1.02 (English)
Save game in Clouds right before it is time to identify the Stain
Yes, cursor glitches are a known problem, thanks to the engine not having proper cursorOn/cursorOff opcodes, but instead trusting that the area will be overdrawn. Since in ScummVM, cursors are handled separately from the game screen, this leads to glitches like this.