Thanks for the additional details, but I think there's still a lot of missing info.
You have H.265/HEVC selected in your screenshots. Are all of your clips encoded that way or are some H.264/AVC? Do you get the same error if you produce to AVC?
Do you have another hardware encoding option like QuickSync in this drop-down list?
If so, does that work when producing to AVC and/or HEVC?
If you suspect that something went wrong with the driver update, try running the nVidia installer again with the specific settings shown in Step 2) in this
post, then reboot and see if the problem is still present.
If it is, please provide the DxDiag test results as requested in the Read Me Before Posting
guide.