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.

ran windows7 ultimate 64bit under lion bootcamp without problems at all
updated to mtn lion
and ran windows8 pro in VirtualBox which is a free alternativ to parallels without problems at all
updated the windows 7 to windows 8 in bootcamp
because it's still using the win7 drivers sometimes it fail to boot and reboots but it always get up the 2ed time
and once inside win8 it have yet to crash
and yes windows update should include all application data which include outlook stuff and windows live mail stuff too if you use that

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