If your camera is suddenly pointing straight up - or straight down - or some impossible direction, then try these:
If you are using a mouse/keyboard sharing program, such as Synergy, or running Parallels on your Mac, then go to Advanced menu (ctrl-alt-d, if not showing) → Show Debug Settings → search for MouseWarp and set to True.
This can happen when you have a non default value set for Font DPI within Windows operating system settings.
If prompted, reboot or sign out and back in.
Many thanks to Crypticzynergy for much of this information.
“Windows XP style DPI scaling” does not actually scale a program's GUI; it only scales/enlarges the system fonts and other system UI elements at higher DPI settings. Basically any text drawn using system fonts is suddenly bigger.
Windows Vista's method is ambiguously called “display scaling”, or better known as “DPI virtualization”. Windows still performs “XP style scaling” when this option is enabled, but programs/software that can handle high DPI settings are now expected to tell Windows they can handle it by setting a “DPI-aware” flag. If that flag is missing, Windows first renders the entire program window to an internal bitmap using 96 DPI (the default setting), and then scales up that bitmap to the current DPI setting before finally displaying it on your screen.
Apparently, having the checkbox marked ENSURES the EXCLUSIVE use of the legacy “Windows XP style DPI scaling” method and DISABLES the additional use of “DPI Virtualization” for programs that lack the DPI-aware flag. Microsoft/Windows dislikes non-conformity by 3rd party programs to the point where it won't play nice with said software/programs, like SL! This is where the tantrum comes – in the form of Mouselook view issues. (Basically when the checkbox is unchecked, you're actually enabling the newer method – DPI virtualization.)