Sudden resolution change, disappearing enemies and parts of shop/weapons missing

Hi there,

I’m playing Borderlands GOTY in co-op mode on the pc (through Steam), we’ve reached level 68 and are working on the circle of death line if The Secret Armory of General Knoxx.
Up until a week ago everything seemed to be ok, a few hiccups here and there but nothing too bad. Last week when we both logged in, it seems that the game automatically changed our resolution settings for some some reason. We tried playing with the settings a bit and didn’t think it would be a big deal.

While in the arena, I was not able to see half of the enemies coming, did not see the proper animation for my turret (Leon) and only saw a colour rising from the ground instead of an item. When we exited the arena and went to a different area, it seemed to be ok.
At some point I was trying to change weapons in the slots and the game took out the old weapon, but did not place it in inventory, while not showing the new weapon in the slot (hotkey also did not work) . This was at the end of a session and the next time we logged in, the weapon was simply gone (same happened to my friend’s combat rifle)

I am now trying to play on a 1600 by 900 resolution with all settings off or low, but no improvement . Enemies are not physically moving, they just stay in a frozen position while coming closer. Sometimes when I go into the ammo store, it doesn’t show me all the ammo types to refill (for example, SMG ammo will simply not be on the list).
Hardware and connection wise, I should be able to run this game on highest settings easily.

Do you folks know if there is a simple fix for these issues?
Additionally, would my character be lost if I would reinstall the game, or is that data saved somewhere?

Kind regards,
Halkandro