Press esc to open up the menu. Go to graphic options and check the window mode and the resolution you want to use. Click apply. Log out once so it saves; if you crash before you do this it'll just go back to fullscreen.
If you run in place that just means you are lagging.
Lagging... means your actions looked delayed to you but to everyone else who isn't lagging they'll see you standing still. If you lag while being attacked you'll still receive damage but you'll see it couple seconds later... .___. Not sure how to explain very well.
But with the resolution if you only have one then... just choose that. :]
One major cause is your Internet connection; if you don't have a good connection no matter what you do you will lag. Same with meeting at least the minimum requirements for the game.
Another is to close any unnecessary programs running in the background. Example; close any browsers.
Regularly check your computer for viruses, spywares, and the like. Run disk defragment at least once a month or after any major download/installation of anything.