Hi bda,
Welcome to the forum. Glad you're here. Let's see if we can figure this out.
It's not really clear from the image what the distortion is, since we can't see what the original was. Is it the color of the links? or the font? Can you be more specific.
Just a guess at this point, but someone might have changed the CSS for those items in the previous template, and when you updated the CSS was overwritten with the new version.
We might be able to help you more if you could send us a link to the site. Also see if you can track down the CSS that controls these items by using Firebug. We have a tutorial on that if you don't know about it.
www.ostraining.com/blog/wordpress/firebug-wordpress-css/ Give us some more details.
Cheers,
ed