Batzilla - after you removed the two files and was able to finish the update, did you put the files back to \system32? Also, by saying "finishing the update", do you mean the final avast screen that asks if you want google toolbars/chrome?
I have three WinXP Pro machines. Avast2014 install, reboot, final toolbar screen went fine on two of them. One looped at the reboot (never showing final toolbar selection screen - nor loading all the bottom-right icon programs, either). Uninstalled and reinstalled old ver of avast just fine. Once the 2014 version was successful on two other machines, I attempted to reinstall on the problem machine, this time with complete success.
Until today, late Nov 1, 2013. avast had the first program update to 2014 ver 9 (build 2007). Guess what, it hangs on the reboot after the install! Trying to Uninstall from Control Panel, but it won't go away. Deleted everything out of the Program File\Avast Software/Avast folder and installed the pre-2014 version. It hangs, too.
Crazy, sometimes it works and other times it doesn't - even on the same machine. I've grown dependent on this great avast free product over the years and don't want any of my machines compromised. I need the protection. Help! avast!
There are people reporting similar problems with other Win vers (like Win8), too.