Its as if my computer just doesnt realise its connected to the net and this only started happening after i rebooted after activating with the new registration key.
Try switching the proxy settings from "Auto-detect" to "No proxy" (I'm assuming you're not connecting to the Internet via proxy).
Left click the avast icon > Settings
Update (Basic) > Details > Proxy
If this does not help, can you try to repair your installation?
Go to Control Panel > Add/Remove programs > avast! antivirus > Remove
Then choose Repair function in the popup window (Repair).
You must be connected to the internet while repairing.