I've going through all the logs and error messages one more time.
First of all, TexGen is complaining about 7 normal map textures from SFO and 1 normal map for Immersive College of Winterhold. Those mods don't come with those normal map textures, so not a lot I can do about that.
DynDOLOD is producing more errors. First of all, the only textures I could find with the wrong format were from the "Tree Bark in High Definition" mod. Those were the only ones Dyn said were in faulty format. So I used Cathedral tool to downsize them to a proper format, and I'm no longer getting any errors for faulty textures.
"File not found meshes" - I get some missing nifs from DarkFox' Merchants of skyrim mod, Arthmoor's Shor's Stone, some from CACO, some from C.O.I.N, some from Elianora's Halla mod, and a couple others. Not sure what to do about that, those mods didn't come with those nifs, since I haven't removed any meshes from those mods.
"File not found scripts" - I only get a couple of these. Half of them are from the official CC content, so cant really do much about that either.
"File not found textures" - I get a dozen or so missing texture from SFO, one from CACO, one from Routa, 2 from Elysium Estate. Not sure what to do about that either.
"Property not found in scripts" - 9 of those are from JK's Sky Haven Temple weapon rack activation, and I get a handful or so from the official CC content.
And finally, "large reference bugs", now I get a ton of these. Cutting Room Floor, JK's Skyrim, Immersive College, iNeed, Unique Border Gates and many others. I did read the large references bug section, that this can cause zfighting, and I do notice quite a lot of zfighting and texture flicking in the lods. The only problem is, I don't know what to do about that, flagging these mods esm is not an option.
Also, even with thhe current improvement, the purple square is still there. But you mentioned you found out what was causing this?