This is exactly the same issue I mentioned in my VPC: Mouse issues running W2K3 under Virtual PC 2007 almost a year ago. But this time it's with Windows 2008.

Solution: Set Hardware Acceleration to Full

Problem: My mouse movement was really sluggish in a VPC running Windows 2008 (and 2003, but other OSes are fine)

Acknowledgement: Thanks to Paul Adare on the Microsoft Newsgroup for originally sorting this one out

Here's the steps:

1. Right click on Desktop, select Personalise -> Display Properties
2. Monitor Tab
3. Advanced Settings... Button
4. Troubleshoot Tab
5. Change settings button
6. Slide the Hardware Acceleration tab to Full