To make sure I've got this right:
- you launched Windjammers with a previous polyface or Steam setup and it looked normal
- you updated to the new PolycadeUI and added the new supporting files
- you tried Windjammers again and this time it showed up with washed out graphics
MAME (the emulator that runs arcade games like Windjammers), has lots of video settings.
We did change some video settings in the recent update, so it's possible that this caused the issue you are seeing. That said, the machine I just tested has the same version and supporting files, and the games look normal.
If you'd like to play with the video settings in MAME (the video settings are called HLSL), here's a little more info: