I received a very quick reply from Kubotek about this problem and I am posting the solution here. I hate it when people find the solution to their problem and either don't post it or say something like "Nevermind, I figured it out".
"These are settings to try to fix the “Ghost Cursor” issue.
Tools, Options, Display tab
You will want to change the Hardware open GL Setting to Software Open GL.
If Anti-Aliasing is on then turn it off."
Their instructions didn't say it, but you also need to restart KeyCreator for the new display settings to go into effect.