I got borderless fullscreen working after changing Windows scaling from default 125% to 100%. So that means borderless fullscreen doesn't work out of the box on Windows default scale, those scaled resolution values get in the way for games I think.
Edit: found a solution https://www.reddit.com/r/buildapc/comments/pnjkcj/does_window_scaling_to_125_aff...
The mouse problem doesn't seem to be related to fps, I checked and got consistent 125. The sensitivity fixed itself after going into the desert and from there keeps working.