One thing I could mention here when going to remove a similar I-Worm virus which also posed as a fake antispyware program someone made the mistake of trying to try out I ended up wiping the drive on a Vista laptop to see a clean install of Windows go on even after the bug was removed completely! It had already done a job on the system registry and wouldn't connect online.
As for AVG and other free av programs as well as having 3 or 4 other anti-adware/anti-spyware programs on back in 2010 someone pointed me at much newer update av program that also rolled up the protections seen with the other programs AVG and other av programs lack. One program does it all now! VIPRE Internet Security 2012 upgraded itself over VIPRE Home Premium which includes a very effective firewall as well.