Okay, following step 3. Error sign has disappeared.
Step 4. I do nothing but bind "Force cursor to show, toggle" to middle mouse and "Camera transpose mode (press and hold)" to left click. Controls work fine, a single middle mouse depress enables the cursor and left click controls camera transpose fine.
Exit game, reload DCS. Open a random mission in the F-86, error has returned as per usual. Middle mouse still works but Camera Transpose is BORKED. It's always after a restart.
Come to think of it, Flappie did you try restarting the game? Sorry I forgot to mention, the error appears after restarting the game once the controls are bound. Maybe that'll get it to show up for you.