Maybe I'm just not awake enough yet, but I think I'm missing what the question is.
Don't forget the "internet Options" settings for dialup and the Avast setting for dialup are more or less independent of each other.
I'm on a 56 dialup and have my Internet options set to "never dial", like yourself. That's mainly because if I happened to get disconnected with either of the other two options, I'd be notified by both the DUN and IE, and each would offer to try reconnecting. Interestingly, IE was usually faster to "see" the disconnection and react. With "never dial", I just get the single notification from the DUN.
The dialup setting in Avast itself sinply tells it, in effect, whether to check for an internet connection before it goes looking for updates, rather than assuming you're already connected. Somewhere (in Help, I think) there's a description of the background "pinging" it does to check for access to the Avast servers.
The above is no doubt as clear as mud.
But hopefully it'll give you something resembling the answer you were looking for.
Best,
Mike
