When I run Mac OSX 10.4 as a client and Windows XP as a server. I would move my mouse from XP to Mac and the mouse on the Mac would disappear until it returned to the XP Desktop.
I ran synergyc with --no-daemon to see what the problem was and they connect successfully, but only if I use XP's local IP address. Also, it would show that the mouse was entering and leaving the screen.
I have used synergy successfully between two different versions of Windows, before, so I don't know if the XP setup is the problem or not.