has anyone else had the problem with the game both during game play and in the menu being blurry? when i move the mouse around its almost like it "cleans" the blurriness away but then it comes right back. all of my drivers are up to date.
some info....
Operating System: Windows 7 Ultimate 64-bit (6.1, Build 7601) Service Pack 1 (7601.win7sp1_gdr.120305-1505)
Language: English (Regional Setting: English)
System Manufacturer: Gigabyte Technology Co., Ltd.
System Model: GA-890FXA-UD5
BIOS: Award Modular BIOS v6.00PG
Processor: AMD Athlon(tm) II X2 260 Processor (2 CPUs), ~3.2GHz
Memory: 12288MB RAM
Available OS Memory: 12286MB RAM
Page File: 1803MB used, 22766MB available
Windows Dir: C:\Windows
DirectX Version: DirectX 11
DX Setup Parameters: Not found
User DPI Setting: Using System DPI
System DPI Setting: 96 DPI (100 percent)
DWM DPI Scaling: Disabled
DxDiag Version: 6.01.7601.17514 64bit Unicode
Card name: ATI Radeon HD 5700 Series
Manufacturer: Advanced Micro Devices, Inc.
Chip type: ATI display adapter (0x68B8)
DAC type: Internal DAC(400MHz)
Device Key: Enum\PCI\VEN_1002&DEV_68B8&SUBSYS_29901682&REV_00
Display Memory: 2797 MB
Dedicated Memory: 1006 MB
Shared Memory: 1790 MB
Current Mode: 1600 x 900 (32 bit) (59Hz)
Monitor Name: Generic PnP Monitor
Monitor Model: W2061
Monitor Id: GSM4EA1
Native Mode: 1600 x 900(p) (60.000Hz)
Output Type: HD15
Driver Name: aticfx64.dll,aticfx64.dll,aticfx64.dll,aticfx32,aticfx32,aticfx32,atiumd64.dll,atidxx64.dll,atidxx64.dll,atium dag,atidxx32,atidxx32,atiumdva,atiumd6a.cap,atitmm64.dll
Driver File Version: 8.17.0010.1119 (English)
Driver Version: 8.950.0.0
DDI Version: 11
Driver Model: WDDM 1.1
Driver Attributes: Final Retail
Driver Date/Size: 2/14/2012 20:17:04, 957952 bytes

i get this same effect from icewind dale 2, planescape torment, and lionheart.

Happens with old games.Happens to me from time to time if I play Fallout series games.
You can play anyway?
Have you installed the UAP?

Could this just be because you're running the game at its original resolution (800x600, I think) on a monitor that usually runs at a much higher resolution? That upscaling can make things look blurry, although I don't know why the mouse would "clean" it in that case.

Regardless, might be a good idea to try the high resolution patch (check the sticky thread) and turning the resolution up a bit to see if that helps.

i think it turned out to be that my graphics card settings had forced triple buffering on and something called morphological filtering on...i turned them both off and it seams to work fine...not sure if it was one or both things...too lazy to check

Triple buffering just means that it uses three buffers to draw instead of the usual two (so it can cycle between two back buffers while waiting for a refresh, or draw frames in advance), so it was probably the filtering thing

Had similar kind of problem, but mine was caused by having crossFireX enabled.

Yeah morphological filtering is probably the culprit. It's a cheap post-processing anti-aliasing filter mostly meant for games that don't natively support AA.

Edit: I've just tried it myself, and I can confirm that it is indeed morphological filtering (also known as MLAA) that causes this. I'm really not sure why, because it usually does induce a slight blurring, but nowhere near as much as this. It makes Arcanum look as if it were underwater or something. Which is actually kind of funny for a minute, but hardly comfortable.

Yeah I disabled morphological filtering...for this game.
Turned everything else on ;) Works fine....

Opened Catalyst Control Center -> Gaming -> 3D Application Settings -> Add (Selected Arcanum.exe finding it in it's folder),
Anti-Aliasing:
Anti-Aliasing Mode/Samples - Enhanced Application Settings
Filter - Standard
Anti-Aliasing Method Multisampling
Morphological Filetering Off.

Texture Filtering:
Override application settings
Anisotropic Filtering Level -16x
Texture Filtering Quality - High quality
Surface Format Optimization - On.

Frame Rate Control:
Wait for Vertical Refresh - Always On
OpenGL Tripple Buffering - On

Tessellation:
Tessellation Mode - AMD optimized
Maximum Tessellation L... - AMD optimized

Granted mines on a 2560x1440 screen run by a R9 290x 4GB Core Clock 1050Mhz, Memory 1250Mhz
Catalyst Version 14.9

I switch off all the filters in my Nvidia control panel for this game (AA, Aniso, LOD, Vsync), and the game runs perfectly now. Use the panel to configure only this game, not the rest!