When the mouse button is pressed over the sketch window, it returns the position of the mouse in the sketch window. If the mouse is not over the sketch window when the mouse is pressed then the sketch loses focus and the mouse event is not reported to the sketch. That being the case I don't see how mouseX and mouseY values can be report the 'screen mouse' position.

Perhaps you could make the meaning of the first statement clearer and post some code that demonstrates this 'feature'.

When mouse pointer is off canvas, it reports the last known mouse reading.
You know, by default, callback function draw() is called @ 60 FPS!
And mouse readings are made just before calling it!

Nope! Like I said, once mouse is outside canvas window, it keeps repeating the same value,
which is the last reading it had when mouse pointer was within the window!

It's just a 32-bit WinXP OS. And latest Java 6!

If it's not the norm, I'm suspicious that a utility I have installed ( WizMouse ) can be the culprit!

It allows me to scroll up/down an application window I'm hovering, w/o changing focus to it!