We've had a few reports on AVG updates breaking things on Windows 7 64 bit  (thanks Bill, et all). 

The problem lies with the mandatory update. 

The AVG site has some info on how to deal with the issue here http://forums.avg.com/ww-en/avg-free-forum?sec=thread&act=show&id=94159

• Basically get the machine started somehow (use AVG rescue Disk or any Linux Live CD).  In the windows/system32/drivers directory rename everything starting with avg. Reboot and your system will be back (minus the AV). I  guess it will then be a matter of waiting for it to be fixed, reinstall or change to something else.  

M