This should not happen. Are you sure your paragraphs are styled Body Text? Strangely enough (but it is technically logical), Writer start in Default Style. It switches to Body Text after the next Heading n. Consequently, when beginning to write a new document, you must explicitly force an initial Body Text paragraph.
Autoupdate has nothing to do with "style change=>paragraph formatting sync" (this is nevertheless the standard and cannot be disabled), but works as "paragraph formatting change=>style updated". This is triggered by direct formatting.
From my experiments, autoupdate causes bad interferences between direct formatting (used to "autoupdate" style) and style definition in the dialog.
As is the rule, direct formatting should not be used outside experimenting and your case is no exception. The direct formatting used to change the style appearance remains in the paragraph where it was applied and takes precedence over the parameters coming from the style. If you apply various direct formatting in different paragraphs, you end up with a real mess.
To fix your problem, uncheck Autoupdate box in styles. Remove all direct formatting and work only with styles.
If you need bold or italics only on a word, apply a character style, don't use toolbar button, keyboard shortcut ou menu command (they all are direct formatting).
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