Any known problems w Win7 updates in either Bootcamp or Parallels?

I have been running Win7 I think 32 bit in Bootcamp & w Bootcamp set up as a vm in Parallels 5 on my April 2010 MacBookPro w Snow Leopard latest update.

I have decided to update to Mountain Lion which meant I needed to either upgrade Parallels or just go to using Bootcamp which is a pain w having to re-boot.

Got an offer for a Parallels upgrade from ver 5 to ver 8 so decided to take it. I also have downloaded Mountain Lion.

I have not been using Windows very much in the last year + so had not thought to run Windows updates although I did keep the Security Essentials updated.

But I figured that before doing the upgrades that I should have my existing setup updated. So I ran Windows updates & saw some going back as far as Dec 2011. After restarting a few times & closed it & was on the Mac side & tried to start Parallels Parallels opened but when I selected my Bootcamp vm, I got an error message saying the version of Windows is not supported by Bootcamp. Huh? I just ran the updates which should not have changed the version. I think I had also updated Bootcamp which I had avoided doing since I had read of some problems w that & Parallels & I had had major problems in early 2011 that we never did figure out, but Genius bar ended up replacing logic board, HD & bracket &told me to only gradually install what had been on there besides Apple software.

So I went ahead & shut down & tried to start up in Bootcamp. About half the time since it gives me a message that it couldn't start normally & asks if I want to fix it. I've been saying no. 1 time it got stuck tryig to fix it so I finally had to power down.

Parallels suggested doing a clean install when I asked about it. I did not feel comfortable adding new updates to software that is not stable.

I am also I think going to get rid of the Bootcamp partition (which I had wanted to make the windows part smaller rather than 50 50.)

But I'm concerned now about when I do reinstall Windows7 (which I'll likely have to call Microsoft about since they may think it is a not allowed additional installation. Not sure whether I've gotten my 2 installations since the last time or not.) Whether I will get the same problem if I do run the updates? But I know they have a lot of security updates that are supposed to be installed, but something messed up my system & I don't want to have that again.

On another but related note, since I will be doing some major changes I'm backing everything up. But I never have got the hang on the file structure in Win7. So I ran Windows backup using the default which shows that it backedup files in libraries & personal folders for all users. Would that include my Outlook data & emails? Most of that has already been gotten over to the mac side--although they did me a disservice I guess it was when I was switching from Win mobile phone which I synced to Outlook to my iPhone 4S. Apple store didn't pay attention that I was switching from a PDA phone & I should have 1st synced my iPhone to Outlook & then synced it to my Mac applications. Instead they just transferred the phone info like Verizon would do which is really lame for someone already using a smart phone. I lost my contact pictures & other info got messed up.