Sorry it doesn't mean the file is password protected, a file can be password protected without being encrypted and files can be encrypted without needing a password. Even without a password all you will see in an encrypted file is totally unrecognisable code.
Encryption (applying a code to the file data, which requires another code to decrypt it) stops prying eyes looking at things they shouldn't and is used for secure communication, https sites, like on-line banking, etc.
Virus programs detect viruses by their signatures so a file containing signatures which aren't encrypted can be scanned by another antivirus and once it finds a virus signature it will alert the user. Files that contain signatures, which are encrypted can't be scanned by other AVs so shouldn't alert you.
Antivir is a resident AV and unless you go to extreme length to stop it being resident then it can clash with avast and possibly lock-up your system. It isn't advisable to have two resident AVs on the same system even if one is disabled.