Step Zero: Ensure your DungeonSiege2.ini or DungeonSiege2BrokenWorld.ini in your \documents\my games\ has fullscreen set to false.

Step One: Rename your DungeonSiege2.exe to DungeonSiege2[Game].exe

Step Two: Download the software. (May Require you to download .NET Framework 4.8.1)

https://pastebin.com/aqZQ873B

Step Three: Copy to folder in place of where game exe was, and ta-da! You can play like normal and should be able to launch from the steam button just fine. It should not matter your resolution so long as not under 1280,960.

Should resolve no mouse issue, as well as appropriately set your resolution back and forth upon open and close of the game.
(This should work for either version of the game, by that I mean normal or broken world)

This follows the vanilla 4:3 game-play and not widescreen.

Enjoy! Let me know if you have any issues or if I made your day any better by providing this, it would make mine to know!

Image is only to display how it will look 4:3 which is how it's set to be.

You can replace the contents of your system_detail.gas if you wish, some may need to. [Not directly related to the small patch above]

Code:
[system_detail]
{
[default]
{
detail = 10; // Default detail setting
shadow_tex_size = 256;

[resolutions]
{
[640x480] { max_back_buffers = 8; }
[800x600] { max_back_buffers = 8; }
[1024x768] { max_back_buffers = 8; }
[1280x1024] { max_back_buffers = 8; }
[1600x1200] { max_back_buffers = 8; }
[1920x1440] { max_back_buffers = 8; } // Add your custom resolutions here
[2160x1440] { max_back_buffers = 8; }
[4320x2880] { max_back_buffers = 8; }
}
}
}

[default_settings]
{
[0mhz-500mhz]
{
lodfi = 5.0f;
no_complex_shadows = false;
trilinear_filt = true; // Use trilinear filtering by default
}
}

[video_capabilities]
{
// These are the default settings used when the game detects an unknown vendor
b simple_render = false;
b shaders_on_default = true;
b below_min_spec = false;
b cpu_requirement = false;
b shadows_on_default = true;
b limit_texstages = false;
b no_dest_alpha = false;
b alt_clear_mode = false;
b no_standard_shaders = false;
b no_advanced_shaders = false;
b swapeffect_discard = true;

[vendor*]
{
vendor = "*";

b simple_render = false;
b shaders_on_default = true;
b below_min_spec = false;
b cpu_requirement = false;
b shadows_on_default = true;
}
}