When The Mouse Preference for "Locate Pointer" is set on the Ctrl key even appears to get masked somehow, and the ctrl key event does not get sent  correctly to VirtualBox sessions or Vnc sessions.

Tried on snv_87 + vermillion_devel_88 on x86

To Reproduce :
1. Ensure "Locate Pointer" mouse preference is switched on via gnome-control-center->Mouse.
2. Notice when pressing the ctrl key the mouse pointer is located with a ping like target graphic, which I quite like by the way.
3. Launch a vncsession or VirtualBox session, I've tried Two different VirtualBox sessions Indiana RC0 and Ubuntu and a Vnc session to two different solaris boxes. all with the same result.
4. In a terminal within this session, try pressing CTRL+C, it should move to the next line in the terminal or quite the current command running, it does not.
5. Pressing Shift+CTRL+C and you get the desired behaviour.

Somehow then Locate Pointer is set on, it appears to be modifying the key press event structure before it passes it on to the rest of the applications present in the desktop.