I'm the first one to attest to problems with DirectX and WitPAE, but in this case I wouldn't point to it as the most likely culprit this early in the diagnosis.
You observed the differences in WitPAE directly after a video driver upgrade. Typically DirectX is updated separately from video drivers - but there's nothing to prevent a video card manufacturer from including DirectX components in a driver install (as some games have done so in the past with their installations).
The first thing to focus on is the video driver installation. Either there is some change made to the new driver set that is not playing well with WitPAE, or the installation was corrupted somehow. Unfortunately, many driver uninstallers will lead you to assume they do a thorough job in uninstalling the previous driver set before the new installation begins - alas, this is seldom true.
You'll want to use
Display Driver Uninstaller to completely clean the old driver set from your computer. Use care when using this utility as it is very powerful and could cause you to have no video display if used incorrectly. Follow the instructions given closely.
Then you'll want to install the new driver set. Get it directly from the manufacturer of your video card or from ATI (now AMD). Many cards have either an AMD or NVidia chipset, but the cards themselves are in fact made by other companies, and those companies can make tweaks to their products which means the generic drivers are not ideal.
Another utilty you can use to help you identify a good driver is
Snappy Driver Installer Origin. Make sure it has
Origin in the title as the version of this program without it is no longer developed by the original developers and the new owners have made poor choice with regard to the inclusion of adware and such in that version of the software. The SDI Origin is a fork of the original project which has returned it to its original roots of no adware and such.
After a thorough uninstall followed by installation of the latest driver set, you can also install the DirectX 9 libraries if WitPAE is still giving you problems. Download the
Jun 2010 DirectX package (the latest for DX9). Every version of Windows more or less has its own corresponding version of DirectX - for instance, you need Windows 10 to use the latest DirectX version, DX12. You can install the Jun 2010 package alongside another version of DirectX without issue - but only do so if you're actually experiencing problems.
I think I've given you enough for now - proceed with this, and then we can reevaluate as needed.