Solution turned out to be codec related. Installed FFDSHOW and forced MJPG decompression to be handled through libavcodec and the video is now fine... CODECS THE BANE OF MY EXISTENCE SINCE DX7

Update. After a system reboot the behavior is back to artifacting. Seeing that FFDSHOW fixed the problem once, I'm going to try reinstalling to see if it works again. Wondering if maybe another codec is messing with filter graph codec priority and is causing a different MJPG codec to be used.
 
Original post below...
 
First. Windows 7 x64, SC17 1070 4K. "USB\VID_2D27&PID_1641&MI_00" is the device manager reported hardware id. Driver files used "ksthunk.sys", "usbvideo.sys".
 
I'm having a problem with the built in webcam. When used the video covered with grey horizontal stripes that shift without any pattern and the image occasionally shows green. The indicator LED also pulses rapidly but I'm not sure if that's related. Before posting I opened the laptop and inspected the cable connection without finding any obvious issue. The cable looked fine and connected. I added a piece of tape to see if the added security would solve the issue, but the same artifacting persisted. I think the problem is related to drivers. When using Graph Edit(an application for testing how media is passed off between windows codecs) I can get clean output from the camera by using YUY2 color space and reproduce the artifacting when using MJPG. I've tested and had the same results with Discord, Skype, Chrome extensions, and Graph Edit.
 
MJPG Artifacts

YUY2