Windows 7: Win 7 SP1 video playback problem

Hello.

I have a bit of a "bug" with win 7...or SP1. The symptoms started on tuesday. After updating ati drivers from 10.12 to 11.3 and Firefox, i did so with win 7 to SP1
CCC and FF became laggy after SP1 had installed. And WMP went mad, playing the audio in movies, but no video. Intsalled k-pack, but nothing. Finally VLC bailed me out

So, two days later, a new hdd, win 7 SP1 and 11.3 later I find WMP and EVERY other player presenting the same effects: blurred, noisy video. And its with 720 and 1080 movies aswell. So, I uninstalled 11.3 and installed 10.12 again. Same problem remains. And WMP 12 will not allow dvd options while fullscreen.

After a bit of tinkering with k-pack tools, I found a curious anomaly: mpeg, mp4 and dvd rip avi files presented such behaviour. I downloaded some videos from youtube with...a downloader. The downloader converted pre SP1 downloads to mp4 with no problem, but now it saves in .htm format. And if i convert that .htm to avi, then there is no blurryness, the edges are "antialigned" smooth and the whole video, which is in 240p form is nice even in full screen.

As the change in ati drivers did nothing, I suspect SP1 for a bug. And I have another symptom. I have a gpu observer gadget, that shows me current clock speeds and voltage. And it currently reads: 500mhz core, 993 memory and 1.05V. none of these can be found from ati bios. Used ATI RBE tool from techpower.org.
And the screen flickers pretty badly when switching from browser to desktop. Eg switching clock speeds and voltage.



Its like windows has taken over the control of the ATI card AND has forgotten how to use DVD formats.

It might be a single driver issue, but I want a non SP1 comp back. Can it be done or does win 7 automatically install SP1 to any fresh copy?