I put a post in the Sysinternals forum about the save and save as problem, but i managed to get the trace for the last seconds where the problem with Avast update occurs in a filemonupdate.doc file and will upload that to the URL Igor suggested and hope he will be able to get something out of it (at least i will try).
If you do manage to save the log, I have just found that using 7zip I have compressed the 7.019MB file down to 129KB, that is useful for those of us on dial-up if you had to upload it.
I am also a WIN98 SE user (512 RAM and 55 G of free space) and installed Avast! Home Edition 4.8.1335 a couple days ago. Everything seemed to install just fine and I never ran into any problems except that I couldn’t get it to scan my Outlook Express mail. The only two mail providers included were Outlook/Exchange and Internet Mail.
In the process of trying to resolve the issue, I uninstalled, downloaded again, and just finished reinstalling. NOW I have the same problem as Rogier. When I go to update, it jussssst about finishes before I get the evil red Avast alert that I don’t have enough space to complete the task. I’m more than a little confused, as everything downloaded and has updated just fine until I uninstalled and reinstalled tonight.
UPDATE!!
I uninstalled the download of the program I did from CNET and tried the one directly from the AVAST website. Still no luck. Then I remembered I had made my ‘working’ download a few days ago from filehippo. TADA! I don’t know why, but the AVAST program (still most recent) from filehippo works with my WIN98 SE. Like I said, I don’t know why… and don’t question it… just know it works. Now I’m onto figuring out how to make it scan my Outlook Express mail. GOOD LUCK, Rogier! 
I’m anxiously waiting for a suggestion to successfully resolve this problem as well as to get Avast to scan my Outlook Express mail.
Thanks in advance and keeping my fingers crossed!
Believe it or not but the first download and install of 4.8 was the Dutch version from my favorite download site “Gratissoftwaresite.nl” which downloaded a setupdut.exe from download609.avast.com. This gave exactly the same problem of not being able to use Outlook Express (Server connection failure) I did not even check if it installed the correct VPS files since it was not usable. So I uninstalled and got another download from www.avast.com, namely avast_home_setup_exe neutral version 4.8.0.0. It installs Avast 4.8.1335 in any language of your choice and see Outlook Express works, but then no VPS file update !!
I noticed that the Filehippo site has older versions to download, so my question would be if they implement also an older version of the VPS updater ? (question for the support team)
To Igor i would like to mention that the only way to upload the Filemon log file (actually a doc file) was to issue a ticket request to the support team. If you have other suggestion pleas let me know
And this particular update (you sent the FileMonitor log for) failed, with the “Not enough memory…” error?
Yes, and by the way the ticket id is OOT-705943
I also copied the file to ftp.avast.com/incoming but am not sure this succeeded
Hmm, I don’t see any disk problem there… really just the memory allocation failure. However, I have no idea how much memory is required for the particular operation… will have to wait until tomorrow and ask the developer of this piece of code.
I am a new user and just downloaded and installed Avast 4.8 Home Edition on a Windows Millennium Edition system with Amd Athlon 1000 processor and 256 MB Ram and 80 GB hard disk with 90% free space. At installation and at manual and automatic AVS update (no other applications running) I always get a message in the red box that says the transaction could not complete because not enough memory. Can somebody help me with this, else I will have to uninstall, and try to find another virus scanner.
Claudio Cipollini
Seems that avast is slowly being incompatible with few resources (RAM) computers.
Igor says elsewhere…
It seems that the updating process is “reaching some limit” on the target machines; we’ve already seen something like that before - when the VPS file got over 16MB, it wasn’t possible to write the file to disk in one big write, because it failed on some Win9x machines. No idea why… perhaps an issue with a particular disk [controller] drivers.
If anybody (having the problem) is familiar with File Monitor (from Sysinternals) - could you please try to monitor the updating process (i.e. invoke an update and wait for it to fail) with it? I’d say you can filter only avast.setup process… or use just “avast” mask. If you upload the log to ftp://ftp.avast.com/incoming then, they can look for any other problematic disk access, and possible split it into smaller ones.
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Seems that avast is slowly being incompatible with few resources (RAM) computers.
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Ciao, scusami so benissimo che anche Igor ha lo stesso problema tant’è che ho copincollato il suo thread perche’ io l’inglese non lo parlo, ovviamente ho messo i miei dati al posto dei suoi ;D
Se per caso tu parlassi italiano, ti sarei grato se potessi di nuovo inviarmi i tuoi consigli nella mia lingua.
Grazie e saluti
releone
This is what the support team wrote:
"The “Not enough storage” message means that you don’t have enough memory (RAM) to process incremental updates that are small size to download but require some memory to process. As the virus database size grows, also memory requirements are higher. For now, at least 80MB free memory is required.
Besides installing more memory in your computer, I’d recommend to close all running programs and try to start update manually again.
If it doesn’t help, download and run the latest full virus database updater (now around 25MB):
http://www.avast.com/eng/updates.html "
I downloaded from the indicated site, ran the downloaded EXE file and now everything finished and my virus db got updated to the latest version and apparently everything runs fine…
Conclusion: disable automatic update, and do a download and install of the new virus db on a regular basis (daily or weekly)
Hope this helps
See also here, please.
Thank you for yor reply rogier! 
Hello Rogier, thanks of new for the aid and excuse a question, every time that we make the update virus from the URL that you indicated recommences all from beginning or only update the files lacking?
The above link is for the complete virus signature database, which is why it is 24.13MB and not just signatures you haven’t got.
If you haven’t read this topic on the memory problem, I suggest you check it out, http://forum.avast.com/index.php?topic=45169.0.
if I go to the URL ftp://ftp.avast.com/incoming I cannot open no rows
The preferred way for submitting samples is e-mail (or sending them from Chest). Although, you can use Alwil FTP server as a second way to transfer only big files. Upload them to ftp://ftp.avast.com/incoming (please, note that you won’t have READ access to the ftp server, just write - so you won’t even be able to see what you’ve just uploaded).
Note that uploading the files to FTP, without additional contact, is not a good idea. The FTP is not monitored - so unless we are expecting some files, we won’t really see them. Besides, finding a folder of randomly-names files on FTP doesn’t really say much about them. If we detect it - is it a false positive or something that we added recently? If not - is it a false positive that was already fixed? Is it a virus sample? Is it just some random file some warez guys tried to upload to the FTP? So, please, don’t upload the files to the ftp unless asked to do so (or unless it’s arranged in advance).
If I go to the URL that you have indicated to me, it makes me to unload update of the 11/05/09. Yesterday to the same URL I have unloaded update of the 10/05/09, but going to install it, the installation jams with the following message: - the database already it is dawned but if I go to control to the voice - about avast! - I still find like last modernization the date of the 19/03/09. why? Thanks
Why don’t you try an installation from the scratch?
http://forum.avast.com/index.php?topic=45169.msg378451#msg378451