If I set the resolution to 1920x1080 (or 1600x900) the picture is "off". My mouse movement doesn't correlate with what is happening on the screen and none of the UI is visible. The only playable resolution seems to be the 720p one.

I have a GTX 970 GPU. I already tried the Screen scaling settings on the Nvidia control panel and they didn't help. They just moved the picture to the left hand side and the mouse correlaton issue persisted.

Is there any way to use the 1920x1080 resolution?

Thanks!

I have a GTX 980 Win 10 & have no problem with NWN1
I don't use 1920x 1080 because the writing is too small, but it scales properly if I do.
Did you override scaling set by games & perform scaling on GPU?