@JamesMaeding
We figured out the mystery on our side.
The symptoms revolved around Selection Cycling - when Selection Cycling was set to 2/ON, jerky cursor, when set to -2/OFF, no problems. Removing the problematic XREFs temporarily fixed it, much like what you guys were dealing with. This problem was happening on multiple machines with different configurations.
The problem was specific to a particular CAD file.
A suggestion by someone in this thread pointed to FONTS being used in the CAD file causing issues, and I think I may have found the culprit.
The particular project we're using uses Futura BT TRUETYPE fonts. We were supplied these fonts by the architect for their border as a standard, but the architect ALSO used these fonts on their *room names*. The other poster said it was their Swiss family of fonts, which is ALSO a truetype font. (TTF files)
We noticed the slowdown happens when our mouse hovers over room names with that Truetype font being used. If we use built-in AutoCAD fixed width fonts like Romans we have no problems, so therefore as a solution to this issue, we simply reformatted all the room names and fonts to use Romans - it looks uglier, but the architect never said anything about using their font standard for their backgrounds.
This was happening on three different computer configurations. One was an i7 6700k running Windows 10 and AutoCAD 2019, another with an i7-4700k running Windows 8 and AutoCAD 2018, and another on a Xeon E3-1270 running Windows 7 and AutoCAD 2014. All these programs can reproduce this problem by simply turning selectioncycling on/set to 2, so it's been a longtime issue, it's not new to 2017. Hate to necro an old post but I came from Google searching. The slowdown only happens if the cursor hovers over the text.