And just how does a software update fix faulty hardware?

Its not fixing the hardware, but fixes the error that says ""DPC_WATCHDOG_VIOLATION (0x133)" + Faulty Hardware. 

Symptoms

When this issue occurs, you receive a Stop error message that resembles the following: Snbsp;<var class="sbody-var" style="box-sizing:border-box;">parameter1</var>, <var class="sbody-var" style="box-sizing:border-box;">parameter2</var>, <var class="sbody-var" style="box-sizing:border-box;">parameter3</var>, <var class="sbody-var" style="box-sizing:border-box;">parameter4</var> )

Notes

• This Stop error indicates a DPC_WATCHDOG_VIOLATION issue.
• The parameters in this Stop error message vary, depending on the configuration of the computer.
• Not all "0x00000133" Stop errors are caused by this issue.

Please click KB3013791 for further information regarding your question.