Definitely sounds like a virus. I've been using AVG Free for about 7 years now and to date have never had a problem with viruses.
Every system is different though, so there's never any assurance which is best for yours.
There is no anti-virus system that catches them all. The thing is, until a virus is created and released, anti-virus programs can't know it exists. Once it is released, then the AV programmers have to find the fix and update the program.
Kind of like going in circles sometimes.
