I have had the same problem since the Avast's "special update" that popped out on my screen on June 21, 2011 and I strongly believe that it is something wrong with that update. It was not the automatic usual daily message, it was different even in color. I clicked to install that "special update" and when I was asked to re-start the computer it kept on trying to load Windows time after time with a blue screen. I had to do a Windows Repair and, since Avast was not working after that, I uninstalled it and Windows loaded correctly. I re-installed Avast from its web site, and I was not able to open any program, not even the browser. I uninstalled Avast and Windows worked normally.
I have been using Avast Free software for one year without problems while using Windows XP Pack 1. Today I updated my computer to Pack 3, but I am afraid to re-install Avast since I am convinced that it is something wrong with that update, not with the Pack number.
It is unfortunate, but I will have to look for another anti-virus unless someone looks into this trouble. Thank you.