FULL PRODUCT VERSION :
Happens with both:
java version " 1.7.0_25 "
Java(TM) SE Runtime Environment (build 1.7.0_25-b15)
Java HotSpot(TM) 64-Bit Server VM (build 23.25-b01, mixed mode)

java version " 1.7.0_40-ea "
Java(TM) SE Runtime Environment (build 1.7.0_40-ea-b29)
Java HotSpot(TM) 64-Bit Server VM (build 24.0-b48, mixed mode)

ADDITIONAL OS VERSION INFORMATION :
Mac OS X 10.8.4

Darwin Geoffs-MacBook-Pro.local 12.4.0 Darwin Kernel Version 12.4.0: Wed May 1 17:57:12 PDT 2013; root:xnu-2050.24.15~1/RELEASE_X86_64 x86_64

EXTRA RELEVANT SYSTEM CONFIGURATION :
Using an external monitor (connected with a DisplayLink USB-to-DVI adapter)

A DESCRIPTION OF THE PROBLEM :
I have a laptop with an external monitor connected. When I open a Java window running my application and drag it to the external monitor, mouse events are received in the application with completely bogus Y screen coordinates. That is, MouseEvent.getYOnScreen() returns a number that's a few hundred pixels away from the real location.

REGRESSION. Last worked in version 6u45

STEPS TO FOLLOW TO REPRODUCE THE PROBLEM :
Run the attached test program, drag it onto your second monitor, and wave your mouse over the frame.

EXPECTED VERSUS ACTUAL BEHAVIOR :
EXPECTED -
No console output.
ACTUAL -
mismatch (1725,-341) != (1725,-161)
mismatch (1710,-334) != (1710,-154)
mismatch (1697,-325) != (1697,-145)
mismatch (1691,-320) != (1691,-140)
mismatch (1678,-310) != (1678,-130)
mismatch (1662,-298) != (1662,-118)

etc...

REPRODUCIBILITY :
This bug can be reproduced always.

---------- BEGIN SOURCE ----------
import javax.swing.*;
import java.awt.*;
import java.awt.event.*;

public class Test extends MouseAdapter implements Runnable {
  public void mouseMoved(MouseEvent e) {
    Point p = e.getPoint();
    SwingUtilities.convertPointToScreen(p, e.getComponent());
    if (p.x != e.getXOnScreen() || p.y != e.getYOnScreen()) {
      System.out.println( " mismatch ( " + p.x + " , " + p.y + " ) != ( " + e.getXOnScreen() + " , " + e.getYOnScreen() + " ) " );
    }
  }

  public void run() {
    JPanel panel = new JPanel();
    panel.setPreferredSize(new Dimension(300, 300));
    panel.addMouseMotionListener(this);

    JFrame frame = new JFrame();
    frame.add(panel);
    frame.pack();
    frame.setDefaultCloseOperation(JFrame.EXIT_ON_CLOSE);
    frame.setVisible(true);
  }

  public static void main(String[] args) {
    SwingUtilities.invokeLater(new Test());
  }
}

---------- END SOURCE ----------

CUSTOMER SUBMITTED WORKAROUND :
The relative coordinates seem to be correct. My workaround is to use reflection to overwrite MouseEvent.xAbs and MouseEvent.yAbs with values obtained from SwingUtilities.convertPointToScreen.