Sorry...title should be Playback Scrambled ...
Can you show us screen-cap of the Timeline, the Program Monitor (with the scrambling) and the Project Panel, with the Asset visible.
This sounds like a video driver issue, so I'd ask all about your video card, and the exact driver that you updated to.
I'd also check Hardware Acceleration settings, and test with changes to these. If min, try max. If max, then try min. Increment up/down, if things improve. Also, tell us what your OpenGL settings are.
Last, can you tell us your Project Preset, and for the the Assets, the full specs. of both the AV Assets and the stills?