Correct on all counts. When I stream just the game or just the launcher, without mstsc.exe, the problem is still there. I also have used the 2007 Dell monitor at the native resolution 1680x1050 without Moonlight Streaming and still have the same issue.
I have finished backing up the entire Aurora PC and might just wipe everything to start over from scratch, reinstalling windows and slowly adding things back to see whether or not the error returns and if so, why.
My work laptop doesn’t have the hardware capabilities to run games (integrated graphics card) but when I installed a clean version of Sims 3 the launcher worked just fine. Something in my gaming pc is causing the issue.