I just upgraded my Avast Free version 8 to the latest update about an hour ago. I can not get VPN to work either. I get the same exact error message that the OP is getting. "No internet connection." I am also using Windows 7 64 bit SP1. Avast has been my only antivirus installed on this computer. I am using Malwarebytes Free edition also. Something broken in Avast 8? That's what I believe.