I have resolved the issue and optimized my computer by leaps and bounds. Albeit, many computer problems are caused by human error, corrupted files, virus activity, overloads of this and that. This is a new installation of Windows 7, with the above mentioned specs and respectable internet security suite. I use the MVPS hosts file, that I add the updates to, and I update it myself, if something nasty comes up and I keep a good eye on my cookies regularly.
Here's what I did. I ran Autoruns by Sysinternals and unchecked any references to Microsoft Office (Office still works fine, btw). Since I don't use adobe acrobat to read PDFs, I unchecked the autoruns there also (I use foxit) I believe there are many items in that list that I could have unchecked, but if I wasn't exactly sure what it was, I left it alone. I only went by what I saw in the description and location. I recommend this to anyone having problems of this nature and general slow down of their system. Be careful, and try to understand what you're unchecking as a program that automatically starts in the background when Windows starts. The whole process took less than 20 minutes of going through the list for me.
All of my thumbnails work perfect, videos, .jpg, .png, etc.
Note:
I do not believe that any updates to my computer caused this problem as I originally proposed, as I installed windows and completely shut off all MS updates, but yet the problem started right after one of my other software installations.