Ensure that your outbound firewall settings allows avast.setup internet connections, that is what does the avast updates.
I can not find any exe or file named 'Avast.setup" in my Avast program folder or on my C ( OS ) partition that I can point to in the firewall rules.
Would it be a good idea to download Avast again....and reinstall?
1. The first problem that you will come up against as this isn't a permanent file, it is created at the time of the update. If I remember correctly it is created from the C:\Program Files\AVAST Software\Avast\Setup\setup.ovr file, so when created it would be in that folder as C:\Program Files\AVAST Software\Avast\Setup\avast.setup.
I don't use the windows firewall:
So I don't know if you can use the instructions given by craigb above to manually create an entry for C:\Program Files\AVAST Software\Avast\Setup\avast.setup as the program added in his image isn't for avast.setup but AvastSvc.exe and that doesn't handle the updates.
You could try launching a manual update and quickly try using the Browse... button (in the above image) to the location I gave for the avast.setup file (before it is removed).
2. No point in downloading again as this condition wouldn't change.