Your settings are correct. This is by program design - when you move your admin mouse pointer the remote mouse pointer also moves, but not vice versa. So inevitably if you once move your remote mouse pointer (by physically moving the mouse) and then the admin moves hers the remote pointer will "jump" to the admin pointer location.
While we do have this suggestion on our wish list , it is not among our immediate priorities simply because with so many free messengers around (Skype, etc.), corporate conferencing tools and the like it would be suboptimal for us to try to replicate this functionality. Our specialization is purely remote access/remote administration, rather than communication - especially when it comes to communication between hosts rather than between admin and host.
Don't hesitate to ask me if you have other questions.