Update:
A nice tidy removal and fresh installation solved my problems and answered the 2 questions:
Emulation is on by default in the file shield, and yes, caching does work with emulation on. Every is running quite snappily now with the default settings.
I use a fax softwrae called "EssentialFax" and when having Code Emulation on "EssentialFax" takes about 12 seconds to open vs 2 seconds when Code Emulation is off!
http://www.essentialfax.com/However Build 6.0.1125.0 has seemed to fix the iTunes issue with the slow scrollbar and xrecode II also seems faster now although XMPlay still takes longer to load after closing the player and then opening it again after about 10 minutes or so. However if I close XMPlay and the open it again with in a few minutes then it opens very fast! So I don't think "transient caching" or "Persistent caching" is not working too well with XMPlay.
Infact I am happy to say "almost" all software now starts up like normal except "EssentialFax" with Build 6.0.1125.0.
But for now I will add "EssentialFax" and "XMPlay" to the Exclusions Tab.
I really hope to see (Code Emulation) optimized even more in future builds of Avast so I do noty have to add any programs to the Exclusions Tab
"transient caching" And "Persistent caching" does not seem to have much effect om my computer.
Could someone test "EssentialFax" and "XMPlay" for me please and let me know your results?
I am hoping Vik can fix this in the next build of Avast