And one more simple thing to try.
Please kill any running avast.setup's, then double click the "avast iAVS4 Control Service" in the Services applet of Administrative Tools (in Control Panel), and on the Log On tab, change it to log on to Local System account, AND enable the service to interact with desktop.
Then retry the manual update.
If that doesn't help, try doing the same thing with the iAVS Control Service stoped altogether.
Geez I'd really love to know what's going on there...
Thanks
Vlk