I think we're going to need more information to help guide you through this.
What version of the machine? base? PS?
What version of the driver and firmware?
What you're describing about the driver dialogue sounds like a bad install of the driver or a Windoze machine that's whack.
Letting the printer manage color is fine if you're looking for drug store prints. Letting the application manage color gives you control over how the image translates to print and is part of a color managed workflow.
Blocking up of colors starts to sound like an incorrect choice in paper type or double profiling.
Base machine (Raster, no advanced color system)
Driver Version (From About tab): is 61.73.361.41, unless I'm supposed to look somewhere else
Firmware: TR12-TR_7.0.0.3
It does sound like a driver install problem. Do I just install over the existing or is there a way to completely remove it first?
I'm pretty sure I have the right paper and am not double-profiling (but I can't be sure since the settings don't always "stick". I'm printing on Red River Premium Matte, with Photo Matte paper selection and using a profile created today with the machine (and using the one created before the upgrade produces the same results). I have NOT tried printing from photoshop, but I have upgraded my Qimage to the most recent version since I noticed the problem.
I couldn't get rid of the Easy Printer Care Utility that was originally installed on my PC. I think I just deactivated the call to it in msconfig.
About the first responder, when you use "Let Printer Mange Color", does it use the profile I created?