When you complain about an upgrade, you should include information about the upgrade... what packages have been updated and so on.

What version of kali-root-login do you have now?
dpkg -s kali-root-login|grep Version

I suspect the problem is related to the switch to Wayland which I reversed with kali-root-login 2017.2.0.

What's the output of "ps aux|grep Xorg" and "ps aux|grep wayland" ?

dpkg -s kali-root-login|grep Version :
Version: 2016.1.0

ps aux|grep Xorg
root 4647 0.0 0.0 12728 984 pts/0 S+ 17:46 0:00 grep Xorg

yes I know that an update history would be helpful unfortunately I updated a lot of packages at once (including distribution) and I don't know which one broke it. If you want I can attach the log.

ps aux|grep wayland

Debian-+ 700 0.0 0.0 188892 5208 tty1 Ssl+ 14:56 0:00 /usr/lib/gdm3/gdm-wayland-session gnome-session --autostart /usr/share/gdm/greeter/autostart
Debian-+ 747 0.0 0.1 326936 43572 tty1 Sl+ 14:57 0:00 /usr/bin/Xwayland :1024 -rootless -noreset -listen 4 -listen 5 -displayfd 6
root 1437 0.0 0.0 188892 5104 tty2 Ssl+ 14:57 0:00 /usr/lib/gdm3/gdm-wayland-session gnome-session
root 1489 0.7 0.3 409160 109360 tty2 Sl+ 14:57 1:19 /usr/bin/Xwayland :0 -rootless -noreset -listen 4 -listen 5 -displayfd 6
root 4910 0.0 0.0 12728 976 pts/0 S+ 17:58 0:00 grep wayland

update: The issue is not present in Gnome classic

So your system is still not up-to-date... please update it and after a reboot you should be good.

I'm changing the summary since the problem seems to be limited to GTK2 apps and only under Wayland.

I tried "apt dist-upgrade" and "apt upgrade" after "apt update" and it seams that there is nothing to update, except putty which I do not want to update.
I'm using:

deb http://http.kali.org/kali kali-rolling main non-free contrib

in the apt source.list

apt list --upgradable

Listing... Done
putty/kali-rolling 0.70-1 amd64 [upgradable from: 0.67-3]
N: There is 1 additional version. Please use the '-a' switch to see it

The software center also only lists putty as the only upgradeable packet. Should I be using a different repo or a different command to update kali?

I can assure you that kali-root-login in kali-rolling is newer than what you reported:
http://pkg.kali.org/kali-root-login

To which mirror are you redirected with http://http.kali.org/README ?

curl -sI http://http.kali.org/README

curl -sI http://http.kali.org/README

HTTP/1.1 302 Found
Date: Thu, 31 Aug 2017 14:13:44 GMT
Server: Apache/2.4.10 (Debian)
X-MirrorBrain-Mirror: kali.mirror.garr.it
X-MirrorBrain-Realm: region
Link: <http://http.kali.org/README.meta4>; rel=describedby; type="application/metalink4+xml"
Link: <http://kali.mirror.garr.it/mirrors/kali/README>; rel=duplicate; pri=1; geo=it
Link: <http://archive-3.kali.org/kali/README>; rel=duplicate; pri=2; geo=de
Link: <http://mirrors.dotsrc.org/kali/README>; rel=duplicate; pri=3; geo=dk
Link: <http://ftp.halifax.rwth-aachen.de/kali/README>; rel=duplicate; pri=4; geo=de
Link: <http://ftp.belnet.be/kali/kali/README>; rel=duplicate; pri=5; geo=be
Location: http://kali.mirror.garr.it/mirrors/kali/README
Content-Type: text/html; charset=iso-8859-1

Do you know which mirrors are up to date?

All mirrors behind http.kali.org are supposed to be up-to-date. We are monitoring them.

But kali.mirror.garr.it is a bit special (it's a round robin on two IP and thus we are not correctly monitoring both servers). I'll disable that mirror until they change this. In any case, if "apt update" succeeds, then you should see kali-root-login 2017.2.0 (apt show kali-root-login).

I checked today and it seems that I was redirected to a new mirror, after the update everything is resolved.
kali-root-login is 2017.2.0 and interface problems are also gone, I also had an issue with putty 0.70-1 which was showing segmentation fault error that also got resolved.

Thanks for your help.

This issue is no longer relevant since we are back to using Xorg and not wayland.