Your settings are saved separately to the game itself (I recommend backing them up though, it's so depressing to lose them to corruption!)

But the update problem is a network settings issue in the PS system itself, nothing to do with the client. If reinstalling fixes it it's unlikely to be a direct result of reinstallation - it will just mean you waited long enough for the network issues causing the bug to clear by coincidence. You need to keep messing with your DNS settings, or connect through a different Internet connection if possible (a phone is great if you can tether) just long enough to trigger the patch download, then it should work normally afterwards.