I have experienced this problem with two separate machines, both running Windows 7 32-bit SP1. This has not occurred on any system with Avast Free running on Windows 7 64-bit SP1.
Both machines were different hardware (one AMD, one Intel) and when one machine was reinstalled using 64-bit Windows 7 there was no longer an issue.
The 32-bit machine is the Intel one and I would rather not reinstall at this point in time, plus I would prefer to understand why this is happening. It has also run very slowly on an older XP machine, but I may not be pursuing this one as the machine is not in service and earmarked for disposal.
If I disable the Script Shield and the Behavior Shield, Avast! does not hang the system, so I am fairly sure it is related to those two services. The only way I can recover the system once it hangs is to run Aswclear in Safe Mode and then reinstall without the two shields mentioned.
As a point of information, I can say the only other Custom Install items deselected are Secure Line, Avast Gadget and all language options except English.