One additional thing I have noticed - which isn't mentioned above - is that while this issue is present, the win key will not open the start menu.
The win key always works for other commands - eg: win+tab - and the on screen keyboard still shows the win key being pressed, but it does not open the start menu.
When the issue with element outlines is not there, the win key works as normal, and will; open the start menu. But once the outlines appear, the win key stops opening the start menu.
It's as if some background process has enabled an accessibility feature, which is stealing focus from the win key?