I have turned of vsync on both my graphics card and the game, as well as changing the flip quene size 'undifined' to 3,2,1,0 and this han'ts appeared to do anything. Its not so much the mouse and keyboard is lagging, but a small .5 second delay when i push the w,a,s,d buttons and move the mouse. Otherwise i can run the game well on medium. Could some one help me out?

If your PC's hardware is dated, its likely unavoidable. I had the same issue with Morrowind when it came out. My system, in particular my graphics card, was simply weak, and playing the game was taxing its capabilities too far. Lagging, chugging, delayed input response was common. The bottleneck could be GPU, CPU, RAM, etc.

FO3 can be especially taxing to GPUs with its water settings. Try lowering them in-game in particular.

Other things to try:

Lower/Disable AA and/or AF alltogether.
Turn down the resolution.
Unplug/disconnect any unused input devices (gamepads, joysticks)
Try updating drivers: graphics, audio, mouse.
Try updating your DirectX.
Have you defraged your system lately?
Try temporarily disabling AV realtime scanners.
Try disabling unnecessary background processes/apps to free up system resources. You can go so far as to try running the game while under a Clean Boot.