I see there are already many posts about this (e.g., http://forum.avast.com/index.php?topic=85464.0). I just spent most of today fixing my computer from this false positive, that ironically also kills Avast in the process. My wife’s laptop is also reporting this “virus” (through an e-mail report) so now I have to make sure that her machine is not screwed also. I just sent a warning e-mail to my company so people there can watch out for it.
This is a pretty major cock-up by Avast and they should be doing everything possible to rectify it ASAP!!!
If you had read the threads you would know that the fix is a simple matter of running SFC /SCANNOW in CMD. It takes but a few minutes to run and resolves the issue.
Whenever you get a problem with the directories/registry in Win7 you should always try to repair this way first.
Cheers - I did read the threads and I did follow them. Most of the day was the post infection boot up scan, before I realized my machine was screwed. Anyway; people shouldn’t have to rely on coming to a forum to fix their computer due to Avast screw up, which is my point.