In this blog post, Morten Nielsen gives a very good explanation on how to create custom cursors in Silverlight.
Source: SharpGIS
There has been quite a few blog posts on how to create custom cursors in Silverlight, but I felt some of them were very limited or not very re-useable, or required you to put the cursor in the layout and put restrictions on your layout (like for instance requiring you to use a Canvas as parent for your cursor). So I ended up writing my own class for it that doesn’t have any of these restrictions.