host file/ loopback address broken cannot update AV/loginto WLM

Hi guys, this has been going for a couple of days now,
I cannot loginto windows live messenger and cannot update my avira free edition anti virus
So I tried updating my AV one night and found that I could not - kept coming up with an error... I could browse the web and torrent etc and so I believed that it was an issue with the AV (which the free edition does not contain a firewall btw) so i did a virus scan, came back clean, hit the forums, everything indicated a change to my host file. ipconfig /flushdns and /renew, reboot modem etc did not fix the issue.
I do not have a static IP, default windows 7 firewall etc
I ignored the issue for the moment, but found a couple of days later that this was not just Avira but also Windows Live Messenger...
troubleshooting windows live messenger came up with an error Error 80048820: Cannot Sign-in to Windows Live Messenger
so I performed all the steps as technet suggested: Error 80048820: Cannot Sign-in to Windows Live Messenger
this has not worked, my Host file remains unchanged and there have not been any recent changes - please note that I am using a netbook without a DVD drive and i really dont want to create a bootable windows usb to fix this issue... ideas anyone?

Please note that I can ping my loopback address, my default gateway, google and public dns addresses, I can browse the web fine, WLM and Avira dont update.
Eventlogs show nothing crazy for the last week and AV scan comes clean with latest manual update. everything works fine.. but obviously not...

You certainly seem to have the proficiency to check for everything possible. :)

But have you looked at the actual hosts file itself? It's located in C:\Windows\system32\drivers\etc - it has no extension but is a plain text file you can edit in Notepad.

There should only be one single entry for 127.0.0.1 and localhost. See if any others were added that are causing your access problems on the Internet.

yep, my hosts file only has the loopback address (127.0.0.1 localhost)

okay, tried a system restore and this failed too - today I logged onto my computer to install MW3 (my desktop) and I found that the same thing was happening to my desktop... I updated from avira 2011 to avira 2012 either on the same day or roughly a day apart... Not with the same download. I can only assume that the downloads avira provided had a broken package or did not have all the info. Regardless - reinstalling windows on both my laptop and desktop (please not uninstalling on my desktop did not fix the issue) .... The only other thing could have been a windows update... either way they both dont update avira / windows update (found that out recently too) / loginto wlm Backed up and now reinstalling thanks guys...