The file is used for the FPS limiter and is safe.
To fix the problem you are describing, go into the Settings > Gameplay and then uncheck "360 Controller". It's enabled by default and is the cause of everything you described.
Thanks nowai, but while unchecking that option
improves some elements of mouse support, it does
not correct the issues I've described. Some of the buttons within the menus of the UI are unclickable and it appears to be a design choice.
Being forced to hit hotkeys in the Items and Magic menus for things like 'Drop', 'Charge', 'Favorite', etc is an unusual design for a PC interface where players expect to be able to click on the buttons. Of course, consoles don't have this ability and have to rely on hotkeys and buttons, but we in the PC world utilise this wonderful thing called a 'mouse'.
The mouse wheel is a real issue and is certainly not by design. Often when talking to an NPC, the wheel does not correctly select the topic you click on, which results in the wrong thing being said. This can sometimes be disastrous in a multi-choice RPG. This issue has also been quite widely reported on.
Whilst
Skyrim is an absolutely wonderful game, its UI does suffer very badly from that new 21st Century disease -
Consolitis.By the way, I wasn't suggesting that 'Dxtory' was
unsafe - just useless for the issues I've described.
Stannie