You either need to enter the Squid Proxy settings in the avastUI, Settings, Updates, Proxy Settings, Specify proxy server and input any authentication settings (see image, click to expand).
My guess is that it is on the default setting, Auto detect (use Internet Explorer settings), if so you would need to have the Squid Proxy settings in IE:
If you have them setup in IE then for some reason avast is unable to access them in IE.
If not you would either need to set IE to use Squid Proxy or (my preferred option) to manually set the Squid Proxy settings in the avast update settings.