So here is what happened:

I was a lvl 36 stealth archer (100 stealth, 90 archery fully perked), I was using a ebony bow (42~ dmg) and i was doing the nocturnal quests.
Then i got the nocturnal bow, Which i then upgraded to flawless which made it around 80~ dmg. I also created a necklace and ring with 13% archery damage.

What should have happened is that my damage output had doubled.
What did happen enemy die as hard or harder, and i am getting "one shot'ed" by supple ancient nord bow (from death lord).

Should i have not upgraded my gear? Did skyrim adjust to these new values?

I doubt it. Never heard about scaling vs. gear. You probably just encountered some higher level guys. The world isn't entirely even, you may have been running around killing lower levels for a while and only now found something scaled up to you.

Did you gain any levels while upgrading your equipment? The improvements in Smithing or other skills would cause the opponents to get stronger compared to you.

Maybe 1 or 2 levels i guess.
But now i upgraded to dragon armor + deadric bow suddenly it's going loads better.


Who knows i do think the level scaling has improved loads