I also have the same problem. Avast Free has updated itself (without asking my permission, I might add) on at least two of my computers) and since then, on the XP one at least, two of my most used programs no longer run: Paint Shop Pro 9 and Notepad++. If I turn off Avast Self-Protection, both will run.
What are the implications of running with Self-Protection off? Is this something that will be fixed? If not, I must abandon Avast.