Empire Earth Video Issues

Same system as usual, WinXP pro SP2 with P4 Prescott 3ghz; 2gb RAM; Nvidia 6600GT.

The problem is that whenever I try and play the damn game, a blue box appears around the cursor, which is annoying. What's worse is that it blurs whatever's under it, so eventually I have a bunch of blurred menus or a blurred command panel. Still worse is that even if I run it at max res (1600x1200) it's still looking like I'm running it at 800x600. What's the deal, and what can I do to fix this... so I can play it like I used to? It used to be nice and zoomed-out, and everything was smaller... and things didn't blur under the cursor. BTW, it's updated to 2.0.

Thanks,
Jag