I never tried the two options at the same time…
When permanently connected, avast! checks the update after 20 seconds it detects a connection (standard delay). New update will be tried in 4 hours. When you choose ‘dial-up’, the same 20 seconds delay and each connection will check for updates or, at least, 4 hours between two checks.
To remove the update error, the best thing is, open the avast4.ini file, go to [AAVM] section and add the following line:
SuppressUpdateErrorInfo=1
More information about the avast4.ini file you can see here 