First you have to ask avast to scan for PUPs in the on-demand scan and second it doesn't delete it unless you say it should ?
Deletion isn't really a good first option (you have none left), 'first do no harm' don't delete, send virus to the chest (a protected area) and investigate.
We can't say what it might or might not do to your system as we have no information to work with.
PUPs are generally programs that can have a dual purpose, malicious or a tool. Like any tool it could be used for good or evil and intent is hard to determine, hence the PUP category as it is only the user that can determine intent.
e.g. did you install it and do you know what it does.
Because you need to have some knowledge of what is on your system to be able to answer this PUP question, I feel that is why it isn't enabled by default.
What is the infected file name, where was it found e.g. (C:\windows\system32\infected-file-name.xxx) ?
For detection on on demand scans, check C:\Documents And Settings\All Users\Application Data\Alwil Software\Avast5\Log (Windows 2000, Windows XP). Or C:\ProgramData\Alwil Software\Avast5\log (windows Vista, windows 7).