I had the same issue and used
Dxwnd to solve it.
I used Dxwnd before for other old games from the same studio (e.g. the Dracula series). As these games all had other issues than Necronomicon, I had no guide how to set up Dxwnd properly, but just by try and error I stumbled upon some settings, that did the trick for me.
Maybe this works for you too:
Get Dxwnd, install and start it.
Go to the game files of Necronomicon, drag the Necrono.exe into Dxwnd.
Go to Mouse settings, on the right side enable only "correct MOUSEHOOK callback".
I think I had problems trying to run the game in windowed mode, so I would also disable "Run in Window" in the main settings.
The mouse movement feels a bit slow, but other settings messed with speed, position or even made the mouse get stuck. Good luck.