The problem with pinging would be unrelated to this update problem, you could try using a different DNS server, like
www.opendns.org. It may also be something at MS blocking pings which could be used to swamp their servers, just a guess, could be totally wrong, you could try connecting to MS.
The other users that were effected with this problem were win9x but, it wouldn't hurt to try the reinstall.
But, before that one check your system date is correct, especially month and year. Also check about avast and ensure that the Updates expiration date hasn't been reached, see image.