Hi,
try again avast settings - update (connection) - proxy, and select Direct connection, press OK and try update again.
Also you can try changing update service's login account, follow this:
1)open services control panel (e.g. Start->Run, and type
"services.msc")
2)double-click on avast! iAVS4 Control Service to show properties
3)switch to LogOn page
4)enter administrator account name and password
5)do the same for avast! Antivirus service
Then start update again.
Please send complete file setup.log to my email.