For no reason the mouse hovering in Mac OS X Lion 10.7 stopped working. For example, when I hover my mouse on the dock it does not magnify, it is like there is no pointer at all. Another instance of happens when I am on a webpage and the mouse hovers over a link where it would normally change to a hand pointer to indicate that it was hovering over the link, it does not. The pointer stays the same black-on-white shape. When I hover the mouse over the red button to close the window in the top left-hand corner of the window, the X does not appear on the red button. Finally, when I open a menu where there is a submenu in a software like Photoshop, neither it highlights nor it shows the submenu until I click on it. It does not always happen and a restart resolves the problem but it is annoying. My mouse is a Logitech MX600 Laser Cordless mouse.
Solution: The problem was the Logitech Mouse. You just need to unplug the USB receiver and it works fine again. If you have a KVM switch, setting the focus to the other computer and back to the original computer also fixes the issue.