Mike, The reference location for library parts in Protel is always
0,0 when you made the part. If the part is made offset from 0,0 you will notice that when you place the part you are moving it around by some point that was where 0,0 was relative to the footprint you designed in the library. Same for schematic symbols except that commonly you put the 0,0 reference just at the connection point of any pin. The issue with updating the part footprint is that if the references weren't the same for both versions of the footprint, the new footprint will come into your design at a location offset from the original and you will have to move it manually back into the desired location. If the offset is on some very small grid (multiples of 0.01 mils, 0.00001 inches), precise relocation of the new footprint could be nearly impossible but definitely frustrating.
Typically I design all SMT parts with 0,0 at the centroid pick location. Others design them such that pin one is the reference location (0,0). There is one caveat to using the pin one reference. Protel generates Pick n Place files with 3 coordinates, the reference location, the calculated center of all pads and the pin one location. With asymmetrical parts (DPAKS, TO263, TO252, etc.) Protel cannot calculate the correct center of the device based upon the pads because the pads are not centered within the part outline.
Protel does have an annoying habit of not refreshing the screen as much as they should. This is undoubtedly why you were seeing multiple pad locations onscreen. Just get used to using V, R (View Refresh) often while performing some operations. It is just second nature to me after years. If I pause slightly in my work, my immediate response is to hit V, R. Hold it, I just reread your response. Sounds like your refresh issue is something else. Could it be video card related? Protel hates the older (3 - 5 years) ATI cards. I thought it was the simple refresh issue when I first read it.