OK, disclaimer first: It's XP and it's german, but perhaps it will help.
The one in "curcle" should be turned off - it says something like "hide cursor while typing".
There is also an option to press Ctrl and see where the cursor is - the part with the "on (might help)" text.
I have the same problem while trying to save a picture edited with GIMP. Does the disappearing occur only when you use a certain program?
Good luck!
P.S. I also wrote the post using ASCII and not binary code.
