Where is that file located? I couldn't find it anywhere. So should I reinstall Avast!?
It depends on the OS. For Win XP SP3 the default location should be:
C:\Documents and Settings\All Users\Application Data\AVAST Software\Avast
Unfortunately at the moment I don't remember exactly which is the default location in Vista and W7.
You can use Windows search, just type:
avast5.ini