OK... I went and picked up my copy of NightLife today (nice person rang me up a couple of days ago telling me it was available for pickup). Last week I'd done a complete reinstall of the game, with Uni, no hacks or custom content. I made one family, played it, and saved it while my woman was in the bath. Install NightLife, and she gets out of the bath, and there is no blur. She was standing in full Barbie nakedness.
(I'm not complaining - I hate the blur, just was extremely surprised!)
I'm guessing this is a bug
(Edit: Missed something out)