In older versions of uScope, whenever there was a connection issue between the camera and the host, uScope would change its settings automatically. When these settings were changed, the region of interest (ROI) would be set to its minimum value (Width and Height will have minimum values). Hence when the live preview was being displayed, the image would be blurry because the camera using minimum pixels at full resolution.
The problem can easily be solved by changing the ROI settings. Click on "Format" in the Image capture window and increase Width and Height of the ROI by typing in their new values and clicking "Set". The "Reset" button can also be used to solve this problem since it sets the camera ROI to its maximum.