Welcome to the forum.
Is your graphicscard driver up to date?
What are the details of your media, your sequence settings, your preview and your export settings.
Check your graphics card drivers for sure... also check to see what playback resolution you're using... On an older, slower computer I used to have, when playing AVCHD on a timeline without playing in full resolution (i.e., 1/2 or 1/4) I would get artifacting like that, though not as bad.
Thank you Ann & Jim!
First, let me say you got me working. It was the video driver.
I did think of this before, but I went to Device Manager (Win7) and checked for driver updates there. There were none. But becuase you mentioned it, I pushed a little harder by going to Lenovo's site and downloading the latest drivers from there, not knowing if it's what I already have... It worked like a champ! Video looks pristine again.
Thank you, and please pardon my bone-headedness.
Just for giggles, I'm including my system specs in case it can help the next guy somehow.
Lenovo G560 (laptop)
i5 Core (not 2nd gen)