I spent the afternoon talking to a microsoft representative who looked at this problem within the document I was having this problem with. He diagnosed the following problem:
"This happens only with this document and its a document specific issue"
A problem was caused by the document having a change in "the word spacing options etc."
This can be caused when retained formatting from an outside source is copied into the existing document whose spacing options are different from those in the original document.
Therefore the solution was:
Copy the entire document into a new, freshly opened, blank document, leaving behind ALL the formatting. DO NOT transfer any of the old formatting to the new document.
After the "text only" is copied into the fresh document the cursor resumes its proper functioning and can always be seen as it should be when using the arrow keys.
Then manually reformat your document the way you want it to be formatted. (Font type, font size, tabs, italics, line spacing, etc...)
Any new text you copy and paste into your document, make sure you paste it as text only without its outside formatting or you run the risk of recorrupting your document and losing your cursor again.
This is the only way to get your cursor back.
For me it was worth it to do, as I am working with the same 300 page document for several hours per day for several months of the year.
