I am running Windows XP
I have followed the tutorial to setup firefox with the 'localhost' proxy and port 12080
Well... you don't have to do that... On Windows XP the scanning of WebShield is transparent. No proxy needs to be used...
Only on Windows 98 and Me this is necessary.
In the WebShield panel for the On-Access Scanner do I need to check or uncheck the box 'ignore local communication' if I have done the above and want webshield to work and scan when I browse the Internet?
While using a proxy... uncheck the option.
If you set to not use a proxy (the better solution), let that option checked..
Also do I have to put anything in the box 'redirected http ports' and 'ignored addresses' if I want webshield to work and have done the above?
If you change the proxy, you need to ad 12080 on that box.
Generally, you don't have to change anything.
URL blocking is up to you

Could someone please confirm Webshield is working if I can see it scanning a website I load up on the 'on-access' panel as well as it has picked up the Eicar test virus as mentioned?
Click
here to test avast! WebShield.
This should bring up a window asking to abort the connection or, at least, the popup message that an infected file was blocked by WebShield.
Another way to see if it's working is loading a web page from your browser and see if it it shows up on WebShield panel as being the last scanned.
Test the web shield using these:
Web Shield Tests
http://www.eicar.org/anti_virus_test_file.htmhttp://www.eicar.org/download/eicar.comJPEG Exploit
http://www.nod32.de/download/jpegcompoc.jpghttp://www.nod32.de/download/jpegcompoc.zip