Yes. Then, in 1986, legislation was passed to address that, putting them in the classification of Citizen by Birth. It is unclear how the 1961 decision would apply, but IANAL. :-)
If one is not a Natural Born Citizen at the time of birth, then one is not eligible to be president. Congress cannot ex-post facto create a Natural Born Citizen out of a foreign national by legislative mandate. The status at the time of birth is controlling. Thus, if Obama was born outside the United States in 1961 and his father was not a US Citizen, then he would not be a Natural Born Citizen.
Congress has the power to make Citizens of anyone they want at any time they want, but they do not have the power to change a person's birth status after they are born. Any act by Congress that would change a person who was not actually born a Citizen of the United States into a "Natural Born Citizen" would be unconstitutional on its face.
They can change them into a "Legislatively Mandated Citizen" but they can't go back in time and make them a "Natural Born" citizen.