Are you using vim from inside a terminal? If you use the graphical version of vim (gvim), the "between two characters" cursor is used in Insert mode and the "h

Are you using vim from inside a terminal? If you use the graphical version of vim (gvim), the "between two characters" cursor is used in Insert mode and the "highlight the current character" cursor is used in so-called "Normal" mode. (In a terminal-based vim's Insert mode, visually the cursor highlight a single character, but it acts as if it were between the highlighted character and the character to the its left.)