I would certainly try the system restore option first, if your gameplay was acceptable before. Then if you do updates again, watch whats being installed and tell it not to update anything for the NVidia 9100.
Windows Updates are important for your PC's health and security.
Now, unfortunately the Nvidia 9100 series seems to be used on notebooks and integrated into the motherboards on desktop PCs. It doesn't seem to be a stand alone video card really designed for 3d gaming. So, yes, I probably wouldn't run any higher than 1024x768 in any games, Sims 3 included. It's also not listed as a supported video card for the Sims 3, not that that ever stops people from running software.
http://www.thesims3.com/game/systemreqHowever, if you have another PC with the same video and it runs fine, seems a little strange.
Not sure how you checked the driver version. If you just went through device manager, then yeah, Windows will say it's the latest driver based on Windows Update.
According to the Nvidia website, the latest driver that supports your 9100 is:
Version: 257.21 WHQL
Release Date: 2010.06.15
Operating System: Windows 7, Windows Vista
Language: English (U.S.)
File Size: 94.7 MB
Supported products: GeForce 9 series:
9300, 9600 GT, 9500 GT, 9600 GS, 9500 GS, 9300 GE, 9200, 9400, 9400 GT, 9800 GTX/GTX+, 9600 GSO, 9800 GX2, 9300 GS, 9800 GT, 9100
If you have never updated a driver on your PC by hand, I would advise caution. And there is no guarantee it will solve your problems with Sims 3. But updating the video card driver is something that most game companies recommend.
If your PC is capable of upgrading the video card, and you decide that's an option for you, this link to a guide on tomshardware might provde helpful:
http://www.tomshardware.com/reviews/graphics-card-geforce-radeon,2646-2.html