Anyone experiencing this will be unable to boot normally.
Details here. (http://securityandthe.net/2008/11/10/avg-virus-scanner-removes-critical-windows-file/)
How to fix it here. (http://www.lunarsoft.net/forums/index.php?showtopic=3403)
Basically you boot into safe mode, open AVG, select the user32.dll and click restore. Then empty the virus vault, and uninstall AVG.
It should reboot normally.

A better bet is to get rid of AVG altogether and use AVAST instead.

Avast (free version) discovered about eight potential threats that co-existed on my computer happily with AVG.

Avast nuked them and in my experience has been a smoother operation than AVG that was pretty good in the early days.

Worked so well, that I subscribed to the Pro version.

I deleted AVG and downloaded Avast and my avira antivir picked up a trojan when I was running Avast. Does this mean the download file had a trojan in it? I downloaded it from the Avast site!!

Simple rule: don't have two AV's installed.
Aviras heuristics can be quite aggressive. I'll bet the detection had the word "gen" (for generic) included in the description. The install file is clean. Security software, by its nature, puts its hooks deep into the OS. To another software, that can present as malware-like behaviour.
Uninstall both of them from the control panel (Be offline. Reboot between each uninstall. Run the respective uninstall utilities for each. Then re-install the one you want to keep.
The Avira cleanup tool is the 6th one down. (http://www.avira.com/en/support/support_downloads.html)
Avast uninstaller (http://www.avast.com/eng/avast-uninstall-utility.html)