Same problem on MacBook Pro (16-inch, 2019) with macOS Monterey 12.1
Can't rotate with mouse. Touchpad, external touchpad and Steelseries Rival 600 mouse all works the same way. Once i move mouse, pointer is constantly switches between system and in-game modes (video attached)
The click point is slightly offset as well.
Don't hesitate to contact me if you need any help with debugging.
Update: Since uploading doesn't seem to work i've uploaded it to the YT
Screen Recording 2022-01-25 at 12.54.55.mov