I know this thread is a bit old but thought I'd post in case anyone finds it in a search like I did when I had this problem.

I could reproduce the system freeze exactly by holding down _any_ key in my main window while moving my mouse left to right. After about 2 seconds the mouse cursor would disappear, the longer I held the key down the longer wow would be frozen after I released the key. Pausing keyclone would stop the problem.

The only thing that fixed it was deleting my WTF/config.wtf file and reconfiguring what I lost with it. I tried changing a few suspect things in my old config.wtf file to no avail - too many settings to try each and every one. I know it sounds strange but something in the config.wtf was causing the freezing when passed through keyclone.