I am posting this so others won't have to break their heads attempting to fix it.
The simple solution is using a different launcher - http://www.mcgillsociety.org/PyLotRO/index.html .
PyLotRO is actually designed for linux use, however it's an exe install and run so there's no issue running it under Windows. And don't let the name scare you - You can change the game in the settings (Even lam is present, I think).
This is the solution that fixed my problem. Hopefully it will help others as well.