Unfortunately, I have to confirm this incompatibility (only applies to Windows 9x).
It is caused by the fact that Kazaa is packed by a utility called PE-Protect, and this utility, among other things, tries to avoid running under debugger. Unfortunately, it identifies avast!'s Standard Shield as a debugger...
I don't think we'll be able to fix this issue (at least in a short timeframe). As a work around, you'll probably have to stop the Standard Shield before launching Kazaa (that should work).
Sorry for that.
Vlk