Simple Fix:

Go To: C:\Documents and Settings\All Users\Application Data\Avg8\update\download

Delete the following files:

avginfoavi.ctf
avginfowin.ctf

Run the update again.

I ran into an issue with Contacts were missing from the selection list in the "Envelopes and Labels" section of word. After checking to make sure the proper address book was being displayed I did some searching and found this: http://support.microsoft.com/default.aspx?scid=kb;EN-US;Q301447. Turns out it is a known issue. Following that resolved it for me. Here are the steps if the link stops working:

**BACKUP YOUR REGISTRY!

Use the following steps to resolve this problem:
1. Close both Word and Outlook .
2. On the Start menu, click Run.
3. In the Open box, type regedit.
4. Click OK.
5. Navigate to the following registry key:
HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Office\8.0\Outlook\Setup
6. In the right pane, click MailSupport.
7. Press the DELETE key or click Delete on the Edit menu.
8. Click Yes in the Confirm Value Delete dialog box.
9. On the Registry menu, click Exit.