Finally there is an answer to this issue
I had the same thing happen in Arma 3
Whenever I move my mouse in the UI
(in main menu or in the map, whenever there is visible ingame mouse)
It would basically put the game into a complete stop, down to 0 FPS
The more rapidly I moved the mouse, the worse
(but it was still possible to do things, just very annoying)
I searched for a long time, found stuff about mouse polling rate and arma and all kinds of other stuff.
Nothing worked.
Now I found this.
And it is indeed DisplayFusion.
Currently on DisplayFusion Pro 10.0 Beta 16 (but it was like this for a long time)
Start Arma 3
BattlEye blocks the hook
https://i.imgur.com/ZpNDbft.png
Then the mouse issue happens.
Go to DisplayFusion settings compatibility and add arma3_x64.exe
Disable Application hooks
https://i.imgur.com/vhu07yN.png
No more mouse issue.
Big Thanks!
It would be lovely if this got fixed for everyone.
(e.g. disable hooks for arma3_x64.exe and arma3.exe for everyone by default perhaps?)
Especially because its not exactly clear that DisplayFusion might even cause such issue in some game