A windows update shouldn't change you resolution.
Try this test:
Open a window (say My Computer)
Size it so it's roughly a quarter of the desktop
drag it around
Do you see the same effect? (ie, it looks like it's being refreshed in waves)
If so, it would seem to be a problem with your video drivers (which COULD have been caused by an update)
If so, right-click a clear area of the desktop and choose properties
Go to the Setting tab
Click Advanced, then go to the adaptor tab and click properties.
Go to the Driver tab and check the Driver Date
If it's fairly recent, try clicking the Roll Back Driver button.