Just make sure you have the oculus home app open, and run the LOW-FI.exe directly, or through steam. Doesnt work directly through the itch app currently.
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If you use the itch app, updates come automatically, otherwise you have to download them from the website. The current version is alpha with a lot of the main content held back. It's coming in fast now though as we inch toward beta.
I mean, virtual desktop isnt officially supported. I don't use it myself, so I can't tell what's wrong there. Many others play the game through it, so it's possible. The only thing I can think of is to load up the oculus software before running the game if youre playing on quest.. or close it completely if youre running through steam. If both are running, I dont think the game can tell what headset you're using.
Steam takes 30%, is more difficult to update from my end, and releasing early access there means that launch day doesnt get as much attention, losing sales because the store algorithms wont pick you up.
Downloading from itch means more money directly to the developer, updates are very easy (works the same as steam for you if you use the app), and you get a Steam key at release. win win win
Nor sure what's going on with non-VR there, maybe your mouse sensitivity is really high? For the Index, all you should need to do is make sure that Steam VR is running, then run the LOW-FI.exe. Make sure that Oculus Software isn't running. Should run without a hitch.