[matthewbpt]

I have found a simple solution for users running compiz as their window manager. Install the package compizconfig-settings-manager with synaptic. This should add a new compiz configuration item to the Preferences menu. Open this configuration, look for 'Window Decoration' in Effects (or type it into the filter ...) and click on it, you should get some options to control window decoration, what we want to do here is disable window decorations for xbmc. Look for the field 'Decoration windows,' this specifies which windows should have window decorations, its defualt value is 'any' , change this values to,

(any) & !(title=XBMC Media Center)

This tells compiz to use window borders for all windows except those with title=XBMC Media Center. Now open XBMC and it open with no window borders, now if you maximize this window from the taskbar you it will take up the whole screen and not take complete control of the keyboard and mouse!

This worked like a charm for me =D