My mouse acts very strange in the game, almost like it only updates the new position every 1-2 frames or something, it feels like it's very "skippy" and skips position when moved.

Did/do any of you guys have this issue and how did you solve it?

For some reason, the issue goes away when I turn on cursor/mouse shadow in battle mode.

WHICH game?

HOMM 3 - thought this was the homm 3 board no?

This is a board for all Heroes titles. It has "series" in the name.

Are you running the HD mod or the alternate renderer?

Use either option, see if that changes the mouse issues.

I solved the mouse problem by downloading both HD mod and the Horn of the Abyss, that I can recommend Graphically, certainly the best looking version of HOMM 3. iWoG maybe solved it but I can't be too sure, as I got used to it.

You just need HD Mod / GLWrapper to fix this issue, no need to install HoTA.