By default, Steam's configuration of Arx Fatalis is bad and non-functional (as in it won't launch). Installing Arx Libertatis, a modification that enables Arx Fatalis to run on modern systems, will fix this. To apply the patch, first install it, then move it to your Arx Fatalis directory in your Steam files.

Download the patch here: http://wiki.arx-libertatis.org/Download

I myself have encountered the glitch in which the mouse moves rampantly across the screen at the slightest movement. This is an easy fix however, and requires no downloads of sorts. To start, first open your Arx Fatalis compatability settings. Check in the box of "Override high DPI scaling behavior." It will ask where. Set it to this option to "Scaling performed by: Application." This option prevents the game from messing with your mouse so much as scaling in games is typically useless.

Next, it as advisable to set the game to run as administrator. You can even set it to run in a compatibility mode. In my case, I set this option to Windows Vista. Finally, open your game and go to video options. One of the first options you will see is for the renderer. By default, it should say "auto-select." Change it to D3D 9. This should fix the mouse problem.