Issues with layer visibility and using eraser

For a few weeks I've had problems with photoshop viewing layers. When I change the visibility in the layers palette nothign happens until I zoom in zoom out and turn the background layer on and off. The active layer just stays visible for no reason. Recently the eraser tool has been behaving the same way I use the tool and the area selected stays visible until I turn the background layer on and off. Only then can I see what part of the image has been erased. It is extremely frustrating. I've updated my macbook to the latest software and my photoshop is up-to-date. I cleared out my harddrive. No success. 

I've attached a picture where you can see the layer containing the image of the robin has been turned off - but the robin is still visible. When I toggle between making the layer visible or invisible I've noticed the edges of the illustration darken - similar to what happens when you have a duplicate layer sitting below and you turn the top layer on and off. But this isnt the case here. There is only 1 layer with the robin.

Has anyone run into this problem before - I need a solution because it is rendering my copy of photoshop completely useless.