I've had the exact same issue with MS Word (Office 2019) since I installed Win11 two days ago. Tried every solution so far (unchecking "hide cursor while typing", switching to the inverted cursor, turning on and off cursor trail and so on) and nothing seemed to help. However, I was able to fix the issue by simply changing the Office theme to Black or Dark Grey ("disable dark mode" has to be unchecked as well). So the "hide cursor while typing" is still on, cursor trail disabled and I am using the standard mouse cursor theme. Seems to me the issue is not with Windows, but with MS Word. No other apps (including MS Excel, Google Spreadsheets and simply typing into the browser search bar) are affected, only MS Word 2019. Interesting thing though is that I also have a laptop with Office 2019 on it, but it's running Win10. No issue there with MS Word so far. Same as my PC, the laptop has the latest updates for Windows and Office installed, so I think it has to do with Win11 and MS Word specifically. Hope it helps.
Yes, as we've noted here already, this is only a problem with Word using Windows 11. Haven't heard about switching the theme, but that is not a fix, just a patch. If users want their theme to be something else, this will not help, and it's not reasonable to ask users to switch Windows themes every time they want to use Word.