1) I seem to be having a difficult time hitting monsters with weapons when I swing my weapons around. Any opinions regarding this? I am missing monsters that are standing right in front of me.

2)When I turn left/right...the screen seems to tilt(even though I deactivated the head bobbing)..is there a way around this? thanks...

If you only miss the monsters *sometimes* it may be because ... you missed hitting them. Every time you try to hit someone, you have a chance to hit, and if you fail that, you miss.

And, you get rocked when monsters hit you.

It tilts when I am turning left/right..when I am not even fighting monster.... any ways to get rid of this?

Make sure that you're moving and not looking around. I believe that the default in Daggerfall was to use the mouse to look around, not turn like in modern games.

If you use the arrows or cursor to turn, then yes it will tilt a bit. Just switch the mouse to View and you'll have mouselook and no more tilting around.