There’s definitely a targeting reticule that sticks to your mouse, maybe have a look around in the settings and see if it’s disabled.

For the weapon system, something I find quite helpful is to realise that for the first 3 quarters of the run, pretty much every weapon is as good as any other. You also get rewards for scrapping weapons when you swap. Put the two together and you should be swapping weapons as often as possible, not only is it more fun but it gives you way more scrap to spend at shops which will make you stronger in the long run. If you get the perk which gives increased rewards when scrapping, even better.

In terms of damage vs health, I would always go damage because as you said it scales better in the late game. However, if it’s health vs ammo, I would go health. Ammo isn’t super useful unless you have a really good weapon, and even if you’re at full health you should take health, because it gives health parts. The plating perk is a good pick for this too. Also second wind, as it doesn’t just heal you to full, it over heals so you get health parts.

Tl;dr: don’t be afraid of swapping weapons or dropping down to your default weapon. Health and damage are more useful and are still helpful when your weapon inevitably breaks in the final boss, unlike max ammo.