PSP 7 problem saving (only) in jpeg format

[wipe2000]

I've been using PSP 7 almost from the very beginning (2001) without any major issues but now i have a strange problem:
About last two weeks when I'll save a picture - any picture - in jpeg format ("JPEG- JFIF Compliant"), the picture quality is very poor. Saved pictures are totally useless.
F. ex. originally 100 kB jpeg picture will be saved to 4 kB no matter what compression factor I'll select from the saving options.
66k colors of the original have changed to ~5k colors while resolution stays the same.
But while saving any other format like gif, png, tiff, psp, ..., everything seems to be ok.

What's even stranger, I think, I have this same program version (7.04) on 2 computers, one running Win7, other running Win10, and both have started to behave at the similar way.
So there is a same jpeg issue on the both of the computers that has nothing in common but the same user. These computers are not in a same building nor on the same network.

Re-installing PSP doesn't seem to help. And saving jpegs on the other programs like IrFan still work as always on the both of these computers.

Any ideas what might have happened and how to fix this? Could Windows update have broken something related just to jpegs and PSP?