It looks fake to me, how would it know you have malware on your system without doing a scan, answer it doesn't. The title in the Title Bar is very generic and seems to pretend to be official, e.g. 'Windows Warning Message!.'
I suspect that the Please Activate your antivirus button is the hook to infect or take you to a site to take your money or infect.
I have taken another look at your original log and this one it the culprit for this display.
HKEY_CURRENT_USER\Control Panel\Desktop\scrnsave.exe
Do a search of your system for this file scrnsave.exe - Ensure that you have hidden files and folders enabled and disable hide system files in Windows Explorer, Tools, Folder Options, Hidden files and folders, see image.
add the file to the User Files (File, Add) section of the avast chest (if it isn't already there) where it can do no harm and send it from there (select the file, right click, email to Alwil Software). No need to zip and PW protect when the sample is sent from chest. A copy of the file/s will remain in the original location, so any further action you take can remove that.
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OK snoopytp it should report the (Hijack.Wallpaper) again and it is possible that this is the cause of the change and your inability to change it back to the defaults. So select the entries for (Hijack.Wallpaper) and use the Remove Selected button. Don't worry we should be able to recover from Quarantine if required.
I will have a look at the new log, i was typing this when you posted.
Edit, it may well be best to also select the other items for removal as well:
HKEY_CURRENT_USER\SOFTWARE\Microsoft\Windows\CurrentVersion\Policies\System\NoDispBackgroundPage (Hijack.DisplayProperties) -> Bad: (1) Good: (0) -> No action taken.
HKEY_CURRENT_USER\SOFTWARE\Microsoft\Windows\CurrentVersion\Policies\System\NoDispScrSavPage (Hijack.DisplayProperties) -> Bad: (1) Good: (0) -> No action taken.