Because you gotta tell it how to map it. Right now it's set to flat which means it'll only apply textures to one side (by default it's the top, that's why it's stretched). You can change it to cube to make it apply the texture to all the sides or since you're doing this with UV's, change the coordinates from Generated to UV, and it'll use the UV coordinates to map it. And if you only have 1 set of UV coordinates you don't have to choose it from the menu underneath, but you can use multiple different ones.
Turning mipmap off doesen't change anything in the texture, maybe its trying to show the UV image and not the texture? I have them both applied :/, but it still, shows up blurry, I got the UV mapping the texture part down, but its still really blurry