Mine works fine (Win95) in all video modes, in both the directory and file windows, with the highlight bar either fixed or scrolling.

The *only* exception is if the highlight bar is configured as "FIXED", and you click on a directory entry on one of the three lines above the highlight bar, the cursor doesn't move. In fact if you double click on any of these, the file window opens where the cursor is, rather than on where you click.