I know the culprit is I have a 2560x1440p screen but run the menu at 1920x1080 because otherwise the menus are just too small to see. Is there a way i can fix the mouse so that it clicks accurately? Atm it's clicking like 3 inches higher than where it's pointed.

Unless you scale the entire game (using windows scaling), then no. Using a mismatched menu vs window size will never let your mouse match up with the menus.

But, absolutely no one, not a single person, ever, in the history of FFXI used a mouse to play for more than a few minutes before realizing this is a mouse-less game.

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Yeah i've been using xbox controller, occasionally i'll try to click something while typing lol