Solution(with clarification):
Enjoy a working zMerc again!
All the credit to @zathrath03
No Support: Steelseries refuses to update the driver. No surprise, it took them forever to release the half-baked x64 driver (Win 7 x64 signed) that we users currently work with. And, I doubt MS is going to do anything because the user base of this product is the size of a flea on a elephants ass...
Reality: Which doesn't change the fact that hundreds of users are without the full function of their keyboards(Merc Stealth) or Gamepad(Ideazone Fang). So, I come here to Toms Hardware seeking the sages/gurus help.
The problem lies in a driver file Alpham164.sys which after the KB4034674 release, is now deemed unstable. Cough.. Bull! It has worked for ~10 years, that is the apex of "STABLE".
The Workaround: Currently, we users that are in the know, are uninstalling the update. However, it's cumulative and this is going to become more difficult over time.
What we need is a way to tell Windows that this file is safe, or, a way to stop Windows from screening the file. I'm pretty sure disabling driver signature enforcement, side-loading, and developer mode, disable Smartscreen have all been attempted, to no avail.
Any ideas or suggestions would be greatly appreciated.
You will need 20-40 minutes to complete this process. Plus, additional time to update your Windows 10 installation.
1. Install Windows Driver Kit (Ignore a number of warnings during the install. Click "OK" through them... you're not developing a driver)
2. **NOTE.. Requires reboot. Disable Signed Driver Enforcement (step-by-step instructions)
Skip steps 1-3.5 by holding down "Shift"+[Click]Restart while continuing to hold "Shift"
3.Locate your ZEngine Directory: e.g. C:\Program Files (x86)\Ideazon\ZEngine
a. Copy & Paste "Kernel2k" directory/folder to a different folder, e.g. Documents, to preserve the original untampered version.
4. In the Kernel2K dir/folder, e.g. C:\Program Files (x86)\Ideazon\ZEngine\Kernel2K, rename every file that starts with Alpham or alpham to something else. (ex. Alpham1.sys => Merc1.sys). I changed mine to Alpham1KB.sys
5. Open the renamed *.inf file in a text editor (Notepad++ C:\Windows\System32\notepad.exe) and do a similar find and replace(Ctrl+H) on "Alpham" replacing with "Merc" (or whatever you used), replace all. NOTE**You may need to take control of the *.inf file. Click for Instructions
6. Locate and Delete *.cat file(the security catalog file) e.g. C:\Program Files (x86)\Ideazon\ZEngine\Kernel2K\Merc12.cat
7. Follow the steps below to add "inf2cat.exe" installation directory to the Environment Variables - PATH:
a. In the search/Cortana box, type "Path", then select "Edit environment variables for your account" or press "Enter"
b. In the "Environment Variables" window, in the top box > "Variable" column > select the row "Path"
c. Click edit.
d. Click "New" in the "Edit environment variable" window.
e. Click "Browse" and add the directory of your inf2cat.exe file & press "Enter". Mine was in C:\Program Files (x86)\Windows Kits\10\bin\x86.
f. Select "OK" on all open windows.
8. Follow the steps below to generate a new .cat file
a. Know the PATH to the new *.inf file. e.g. C:\Program Files (x86)\Ideazon\ZEngine\Kernel2K
b. In the search/Cortana box, type "Command", then select "Command Prompt" or press "Enter"
1. for Windows 10 x64 type: inf2cat /driver:"PATH" /os:10_X64
2. for Windows 10 x86(32bit) type: inf2cat /driver:"PATH" /os:10_X86
**NOTE The "quotation marks" ARE included. And, PATH = the directory/folder where the *.inf file is located. (8.a.)
e.g. inf2cat /driver:"C:\Program Files (x86)\Ideazon\ZEngine\Kernel2k" /os:10_X64
9. Locate the entries "Ideazon Merc MM USB Human Interface Device" and "Ideazon Merc USB Human Interface Device"
a. In Device Manager (to open Device Manager >> [Right click] Windows Button>>[Select] Device Manager)
b. Locate & Select "Human Interface Devices" (or they may be under "Keyboards")
c. Right click > update driver > browse computer > Let me pick > Have Disk > Browse > manually select your newly renamed *.inf file.
d. Acknowledge any unsigned driver warnings(Click OK).
**NOTE..You must do this for BOTH entries.
10. At this point my ZEngine icon, in the task bar, was green again. However, I was prompted to restart my PC; which, I did.
11. Unhide the horrible KB4034674 now KB4038788 and resume Windows 10 updates.
Enjoy a working zMerc again!
All the credit to @zathrath03
No Support: Steelseries refuses to update the driver. No surprise, it took them forever to release the half-baked x64 driver (Win 7 x64 signed) that we users currently work with. And, I doubt MS is going to do anything because the user base of this product is the size of a flea on a elephants ass...
Reality: Which doesn't change the fact that hundreds of users are without the full function of their keyboards(Merc Stealth) or Gamepad(Ideazone Fang). So, I come here to Toms Hardware seeking the sages/gurus help.
The problem lies in a driver file Alpham164.sys which after the KB4034674 release, is now deemed unstable. Cough.. Bull! It has worked for ~10 years, that is the apex of "STABLE".

The Workaround: Currently, we users that are in the know, are uninstalling the update. However, it's cumulative and this is going to become more difficult over time.
What we need is a way to tell Windows that this file is safe, or, a way to stop Windows from screening the file. I'm pretty sure disabling driver signature enforcement, side-loading, and developer mode, disable Smartscreen have all been attempted, to no avail.
Any ideas or suggestions would be greatly appreciated.