Interesting. I hope you know how to quickly fix this by cutting the part first and then creating the cylinder.
You're approach is reasonable. But I've seen exactly this multiple times, so it doesn't work. SW just can't figure out where the borders of that body are. The way to a healthy partially threaded body is to extrude the cylinder, then sweep cut the threads as-required.
That is probably caused by the non-approved graphics cards you are using. Neither the Nvidia GT650M nor the Radeon HD series are suitable for solid modelling with SolidWorks.
I agree with Kelvin... More then likely a non-approved graphics card issue.
Post you part so we can open it and take a look.