The option ‘dial-up’ is supposed to work if you don’t have a permanent connection to the Internet (which is the most common thing in a laptop). The option ‘always connected’ will try to update (program and/or database) each 4 hours.
Could you see what is in your avast4.ini file with both options?
See value for AssumeAlwaysConnected: if you have a dial-up = 0; If you have a permanent connection (DSL) = 1
More information about the avast4.ini file you can see here
Just some shots:
Do you have any other antivirus application installed right now in your system?
Any error window or pop up appeared when the update failed?
What language of avast! are you using? Just English?
Has your version of avast! ever updated before?
If you use Windows XP firewall, try to disable it (Open the Control Panel > Network Connections, right click with your mouse on your connection. Go to Properties. Open the Advanced tab and uncheck the Firewall option. If you use a permanent connection (DSL) you must restart your computer).