FMLE 3.2 video pixelation issue, what could the cause of this be?

FMLE 3.2 video pixelation issue, what could the cause of this be? Does not occur in 2.5 but in the 3 series. I have tried 2 different capture devices (ION video 2 PC MKII and Hauppauge USB 2 Live) same results for both. Just wondering if anyone has seen this before and know why. I've looked through all my windows updates as well but nothing.