Windows 7 cursor lags when playing flash video
Solution 1:
Can you have Flash offload to the video card? Or turn off offloading if it's enabled? Either having it on or off could cause a problem.
The fact that it also happens with large images makes me think that it is a driver issue.
Can you see if there is a Win7 driver from the OEM for that laptop? That would be your best bet, as far as I know. I have had numerous problems with ATI drivers being updated through Windows Update.