After initial installation of Avast free home edition on August 15, I also experienced the "A ball with red circle and backslash" and also could not start the resident. I'm doing this on my venerable IBM Thinkpad 765L, using as an operating system, Windows 98SE with all updates.
I read up on the problem here in the forum, and did my best to clean out after uninstalling McAfee, uninstalled Spybot, uninstalled Avast. I then installed the latest Avast on Aug 17th. Still had the same problem.
So, I uninstalled Avast again. But this time, I installed Avast Version 4.7.844 from the
www.filehippo.com site. I configured to use manual updates, did my initial scan, and shut down.
I restarted and presto, no problem with the resident and no problem with the "A ball with red circle and backslash". Now I have to see how things go on reloading Spybot, ONLY downloading the virus database periodically, and figure out how to survive with no AVAST program updates.