You shouldn't have had to do any registry hacking, that is what the avast Uninstall Utility does and forms the basis of a clean reinstall:
find it here and save it to your HDD.
- 1. Now uninstall (using add remove programs, if you can't do that start from the next step), reboot.
- 2. run the avast! Uninstall Utility, reboot. If step 1 failed it may be necessary to run this from safe mode, once complete reboot into normal mode.
- 3. install the latest version, reboot.
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Any issue with the Temp folder (and %Temp%) may only be if avast uses that whilst installing/updating, but that shouldn't effect any registry setting.
The same is true of the system restore as avast has no requirement to use that, other than if system restore backs-up any changes avast file in a system folder, that however, shouldn't have any impact on the workings of system restore. System Restore is far from infallible.
So there appears to have been something else in the mix during the update and this could have cause the failure.