The code below is a simple tool that doesn't do anything. The cursor change seems to work fine.
Brian
Public Class Tool1
Inherits ESRI.ArcGIS.Desktop.AddIns.Tool
Public Sub New()
End Sub
Protected Overrides Sub OnActivate()
Me.Cursor = Windows.Forms.Cursors.Cross
End Sub
Protected Overrides Sub OnUpdate()
Enabled = My.ArcMap.Application IsNot Nothing
End Sub
End Class