This is odd...
I experienced this jitter along the long axis for the first time this morning, after doing pretty much what I do every morning -- swapping the bluetooth CF card out for the WiFi, doing various synchronizations with my home machine (KOPI, sitescooper files, etc) and then putting the bluetooth card (Socket G) back in.
Next thing I know I'm making a note in FreeNote/Qt and the lines are super-jittery.
Weird thing is that I've never ever moved the clocking on my 860 from where Cacko defaults it ("Default (PXA250)"). I'd never heard of this jitter problem so after a brief moment of panic I played with various levels of resort (reboot, power off and remove battery, etc) which did not fix the problem.
One thing I *did* notice though was that the jitter went from the occasional blip (drawing a straight line has one or two jaggies) to a chaotic mess (attempt to draw a straight line produces a 1-cm wide path of scribbles) when I had the bluetooth card in. Perhaps the Socket G is putting the Z in some sort of powersave mode that exposes the bug?
Odd thing is I've been using the Z with this exact configuration for some time (on Cacko 1.21a and 1.22 since it's release) without incident, and AFAICT I didn't do/change/install anything else that would cause this to suddenly start happening.
Now that I've switched the clocking to "Normal" ("Overclocked" works as well) everything is fine, but when I go back to Default (PXA250) or "Power Saving" I get jitter, and now it happens whether or not the bluetooth card is inserted. The only stable modes seem to be 'Normal', "Default (PXA255)" and "Overclocked".