A PDVD update seems to have screwed up my system, and I can't fix it.

Symptoms

DVD and video file playback from PDVD, VMC, and Windows Media Player is awful - PQ is very grainy and coarse.
Playback with a player that uses its own internal codec (KMPlayer) is fine. Strangely, BD playback has not been affected.

Background

MY HTPC is a brand-new system. Everything (video files playback, DVD playback, BD playback) was fine, until I downloaded and installed an update for PDVD. I didn't really care for an update, but a pop-up notification saying that I need "a crucial update" wouldn't go away and was becoming annoying, so I wanted to get it over with. Bad decision.
I suspect the PDVD update was the cause and not just a co-incident, as other users of PDVD ran into huge problems after the update and at least one user (http://forum.cyberlink.com/forum/posts/list/5101.page) is suffering very similar problems as mine, as I found out at the PDVD forum.

Measures I have taken that have not worked

Uninstallation of PDVD, uninstallation+reinstallation of PDVD, uninstallatio of all Codecs, and uninstallation of all codecs+reinstalltion of K-Lite Codec Pack (as was advised by Dell support, downloaded from
http://www.filehippo.com/download_klite_codec_pack/). None of these measures worked.

My system

Dell Studio Slim with Vista 64, integrated Intel GMA X4500HD Graphics

Need Help

I strongly suspect that the PDVD update did a serious damage to my video system. I can't understand why reinstallations of codecs and video drivers were not a cure, but then again another PDVD user suffering similar problems also tried reinstallations to no avail (http://forum.cyberlink.com/forum/posts/list/5101.page).

The last resort is to reinstall Windows Vista, and, in fact, that is what the Dell Support team wants me to do after everything they tried failed. But I'm really hesitant to reinstall the OS for obvious reasons.

Is there anything that could be tried that I haven't tried before reinstalling Windows?