Did you also press Alt+R while ingame (not in the menu) for the game to switch to your resolution? Did you make sure you changed the 'INGAME_RES' in the config? And to what values and what is your native resolution?
If so, what happens if you configure it to 1024x768w32?
You can also try to force driver 'windib' in the run options, and for your mouse issue you can try 'Alt. input support' to see if it makes a difference.