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You might have to install ui-select as well: https://github.com/nvim-telescope/telescope-ui-select.nvim
I have exactly the same issue, and I found https://github.com/folke/trouble.nvim is super helpful, it render with two area, the bottom area is just like the VSCode search panel which group the search result by file, and the main area is the source code link to the search result item, and you can view the full context without cut the code.
It's not fuzzy during the live_grep itself, but by hitting `` you can fuzzy search among the results shown. You can even use the fzf syntax with https://github.com/nvim-telescope/telescope-fzf-native.nvim/issues.