I'm not completely sure where is the difference, but it may be because Casey is not using Aero style in Windows 7, that means no compositor is running. I get exactly same behavior as you on my Windows 10 (where you cannot turn off compositor). Or it could be because OBS is running in background.
Day 2 code in WM_PAINT does painting only on rectangle that is passed in by OS. And OS can decide to pass whatever rectangles it wants. It can be full window size, or it can be two half-sizes. You cannot rely on specific behavior there.
If you want to see window to be fully repainted when it is resized, add HREDRAW and VREDRAW class styles, as documented
here:
| WindowClass.style=CS_HREDRAW|CS_VREDRAW;
|