Lets try the usual suspects.

First try a repair of avast. Add Remove programs, select ‘avast! Anti-Virus,’ click the Change/Remove button and scroll down to Repair, click next and follow.
That may resolve the package has failed error.

What is your firewall ?
Does it allow avast.setup internet access ?

  • If it does delete the entry for it and do a manual update, this will force the firewall to ask permission again.

Have (or did) you another AV installed in this system, if so what was it and how did you get rid of it ?

You say you checked the proxy settings, which ones and do you use a proxy to connect to the Internet ?