For some reason Syrim has default sensitivity value of y set at very low and x at high and its driving me nuts not having both at same speed. I've already searched through most ini files but found nothing. Does anyone know if I missed something.

So if I move my mouse perfectly in a diagonal motion, it will move more to the right/left than it will up/down?

Yup. Its quite a regular thing with console games as it helps with game-pad controls and it is somewhat useful for widescreen monitors, but you normally have an option somewhere to turn it to your liking. I'm not complaining much, since thankfully I don't have that other more major mouse sensitivity problem, but it is still annoying me. Instead of playing the game I'm looking inside files and trying to find some program that would enable me to set it up in windows to go around the game.

excatly the problem i have, putting aa on helped abit but my gpu runs at 75-82 with everything maxed stable at 50-60 fps with 8 aa.

not sure if that is to hot for a 295 GTX i might need to clean the fan again.

Yes, exactly that. It's quite irritating.

I disabled the " xbox 360 controller" box in the menus and for me it feels alot better now.

The xbox controller (pc) has crazy fast vertical speed also. Its more apperent when you have v-sync off...!