My 2012 iMac is on acid

I have an Nikon D7000, the D7000 is in the supported list of cameras [url]http://support.apple.com/kb/HT5371[/url]

I had no problem viewing .NEF images until Digital Camera RAW Compatibility Update 4.06. After this update if I set a .NEF image as my desktop picture and restart my mac, when it reloads my desktop wallpaper becomes pixelated. This was annoying but could be fixed by setting a new image as my desktop wallpaper.

However since the latest Digital Camera RAW Compatibility Update 4.08 the problem gets a lot worse. Now the image doesn't become pixelated as before but the colours become weird like my make on an acid trip. [look at attached images]

The problem has also escalated for just the desktop background to preview as well. The thumb nails in finder are still fine its just when i open they in preview they get all messed up.

[The original.NEF image opened in ViewNX 2]

[The original .NEF image looks like when I opened in preview]

Any help or suggestions to sort this out would be greatly appreciated, thanks.