As has been mentioned previously in this thread.
Don't start the game with the launcher just start it directly via the FalloutNV.exe in Steam > steamapps > common > fallout new vagas and no settings will get overwritten also make all your changes in the Fallout_default.ini here as well.
Make your changes in Fallout.ini and falloutPrefs.ini in Documents > My Games > FalloutNV just like CrashAegis has mentioned in his posts and some of the others have mentioned in theirs and all is well.
Tried that and it still launched the launcher no matter which exe I used. Either way, the Fallout_defaults.ini file in the steamapps folder makes things stick.
I've given up on the mouse. I can't get it to feel right no matter what. It's so broken it's not even funny. Also, apparently there aren't any 'hotkeys' for the kb/m controls? With the xbox360 controller I get to even hotkey items and weapons. Go figure. Feels 100% smooth with the controller. Sigh.
As for the blurry pipboy text... it actually becomes more readable if you sit further back.