mushroomman2: reducing screen resolution definitely helps fps, but it doesn't help with the mouse lag. any ideas as to why that's happening? there's also a slight lag with keyboard commands. there's no problems when i'm in the main menu.
I believe you can go into your mouse settings and set the movement speed to as slow as possible and it may help some.
Honestly I believe it is part of the video card problem, I may be way off but I'll explain why.
I tried to run the game with these specs.
Win7
AMD 9750 Quad core CPU
6 gigs DDR3 RAM
2- Nvidia 7900 GT cards in SLI mode.
It was a disaster. Very low FPS, mouse lag so bad I never knew where it was.
I installed a new Nvidia GForce GT 440 and now this system eats everything this game throws at it on high settings. I will run on ultra, no uber sampling, with fair to good FPS.
The mouse lag, in your case, is probably a product of your card not rendering everything quick enough to keep your cursor drawn constantly, therefore the lag.
This is speculation on my part but once I upgraded my video card all my issues were gone.