That screen is most likely caused by the Macbook thinking that an external monitor has been unplugged or plugged in. Are you using an external monitor? Try using compressed air to clean out the external monitor port. Be careful, it isn't made of the strongest of things.
I don't think that's related. Did you try downloading the updates directly from Apple's site?
The internal video cable could be coming loose. If you take it to an Apple Store they'll replace it or fix it.