At least in my version of Emacs, that is the default cursor. You can use M-x customize-face RET cursor RET
to change it, if you want. If you want to stop the cursor from blinking, you can use M-x customize-variable RET blink-cursor-mode RET
.
Update: Since you updated your post to mention the version of Emacs you're using, I could confirm that this is a bug in Cocoa Emacs 23 for Mac OS X. I see what you mean - nothing seems to invert the character underneath.
There's a patch to fix it (partially) here.
This and other issues ensure I'm still using Carbon Emacs.
Nicholas Riley
2010-02-25 20:29:35