So Im trying to play SS1.

Edit - Maybe I'm just inept. I found that 'E' is mouse look mode, and the full screen button makes it look more like it does in the trailer and screen shots

The difference between the classic and the enhanced edition is mouselook and more resolution options and the fact that it is not using DOSBox.

So when you start the enhanced edition you should be able to move around using WASD and use the mouse to look - when pressing "e" you will have free mouse movement.

SInce you don't see a difference try and set a higher resolution. 854x480 should work well and should solve the mouse sens issue. You can try higher resolutions by editing the sshock.ini(found in the root dir of System Shock Enhanced) and look for "custom screen resolution". It was reported that resolution higher than 1024x768 are unstable so use that at your own risk.

I got it sorted out. Only crazy thing now with SS1 is the fast mouse on the menus.

Only other thing I am having problem with now is a different game - Ultima Underworld.
It likes to rearrange my windows, and resize them which is pretty annoying to have my pdf's shrunken down and Skype and steam move to corners of my screen

So run it in windowed mode?