This actually happened to me with Vista as well... It happened when I installed an older (not too old) version of avast instead of downloading the current version from the website.
Clicking update did nothing... but then after awhile, it updated itself after doing nothing. Perhaps someone more familiar with avast can elaborate, but when avast updates the program (as opposed to just a database update), clicking update does nothing until avast does its thing. You can try what rassel said by reinstalling, which should fix the problem, but the problem fixed itself for me when I had that issue.
