I have experienced a problem after the last update as well.
This can't possibly be caused by the latest update.
I have a message on there saying "a 3rd Party product has increased the FSX Global Texture resolution beyond that standard maximum of 1024 pixels". This didn't occur until after the download of the GSX update this morning. Thanks for your help with this!!
It's a very well known fact that FSX supports up to 4096x4096 texture resolution, just you can't set it from its user interface. There are many airplane and sceneries out there that use this resolution, which works without any problems.
We have the option to enable HD texture available in the Addon Manager since more than 1 year, when KLAX was released and well before the first GSX release, and it's the "Force HD textures" option. GSX doesn't need it, but KLAX and other sceneries (es. Flightbeam KPHX) and airplanes (es. Qualitywings) use it and it's absolutely safe to use and KLAX will look blurred if you don't enable it.
So no, the problem hasn't happened after the latest update (unless you had the "Force HD Textures" option set to off and enabled it just now), because the option is there since last year, that message from UT is not really needed and it's not an indication of a problem.
Note that, if you have OTHER utilities that set the texture resolution to 4096x4096, you shouldn't use them anymore, because the Addon Manager already does that, and it does it in the smartest way, not keep rewriting the FSX.CFG at every FSX start (or even constantly every second, like a freeware utility does), but writing it only when you set the option, without requiring an FSX restart because the value is also written in memory and updated in FSX immediately.