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I've noticed playing Silent Hill 4 that some of the shadows around the player are totally bugged, also during the  cutscenes FPS seems to drop, any ideas?

https://imgur.com/a/U9rZae1

Here is my config settings:

https://imgur.com/a/Zvyudey

Try the latest dev build https://pcsx2.net/download/development/dev-windows.html also I'd lower the internal resolution a bit. There's only so far you can stretch the image before you'll stop seeing a difference around 4x at this point your just loosing free speed.