As I enter enter this bug using Firefox, the cursor blinks at me. I've disabled the cursor blinking in the keyboard preferences. I've verified that "Net/CursorBlink" is set to 0 in ~/.xfce4/settings/keyboard.xml I've logged out and in a couple of times. In the keyboard preferences, when I put the cursor in the text field, there's no blinking. However, in Firefox, GAIM, Psi, etc. the cursor blinks at me and slowly drives me crazy. I don't know how to rate the priority of this. It's a relatively minor thing, but I find it really really annoying.
Since you already verified that the bug is not in Xfce, why not file a bug report to Firefox telling them to fix the problem?
I don't register the bug in Firefox since the cursor blinks in many GTK application. The cursor blinks in the text input fields of GAIM, psi. The cursor blinks in the input form in the Epiphany web browser (i.e. go to Google and search) The cursor does NOT blink in other input fields. It doesn't blink when I choose "Save Page As" in Firefox. If I use Gnome (where I've disabled cursor blink as well), I get no blinking in any input fields. However, I would prefer to use XFCE4.
Probably because those applications don't use the standard settings for cursor blinking, but maybe query gconf instead. So, again, file a bug report to the appropriate applications.
I'm not surprised, actually: Firefox: doesn't really use gtk in a normal way. Draws its own widgets using gtk's theming engine, but handles behavior on its own. Gaim: Most widgets are normal, but the entry box for conversations is entirely custom, and might not check the "show blinking" setting like it should. Psi: I don't use this and have no idea, but I suspect something similar. Epiphany: Uses the gecko rendering engine (same as firefox), and inherits the same problems, at least in the browser rendering area. So really, this isn't our bug.
Created attachment 668 Simple QT application showing the blinking cursor
I've attached a simple QT application which has a blinking cursor for me. I don't believe QT is querying gconf directly, and I think QT is probably not doing anything really "special". I've also found that xpdf (I think it's pretty bare bones X) has a blinking cursor in the search field.
I appologize profusely. I logged into gnome again, and experienced all the same problems as I was experiencing under XFCE. I'm very very sorry.