Media Player will not play Audio CDs? Wov, that's really strange...
When you insert a data CD - can you browse to it in Explorer and open some file from the CD (e.g. a readme.txt in Notepad, or somethink like that)?
Does it help when you disable the avast! resident protection - specifically the Standard Shield provider?
Do you update avast! regularly? I mean, before the updated to the recent build 342 where the problems started (if I understand it correctly) - did you have the previous latest build 335, or did you have a rather old version (e.g. 268 or something like that)? The reason I'm asking is that in my opinion, there were no changes in the relevant resident protection code recently... a long time ago, a change was done to avoid conflicts with various copy-protection techniques (used often in games) - but that was in October 2003...
Last question: didn't you install any "low-level" stuff recently that may cause such problems (and has nothing to do with avast) - e.g. a burning software?