Update: The trackpad clicks won't recognize either.
When you mention that the clicks are not getting recognized, do you mean no steps are getting recorded or just the mouse cursor is not showing up? Can you please give more details on what do you see in the output?
No steps are being recorded by Captivate if my mouse sits idle for about 10 seconds. Basically, if my mouse sits still for 10 seconds, then no other steps are recorded and the screen that the mouse was sitting idle on is the last slide of the project. I hope that makes sense.