"STOP: c0000135 The program can't start because %hs is missing from your computer. Try reinstalling the program to fix this problem."
Although the update was removed from the servers as soon as they were aware of the problem, there were many impacted by this issue. From reports, it appears as though 64-bit systems were impacted by this issue. Reports differ as to whether this issue was restricted to Windows 7 or if it also included Windows Vista customers.
AVG has provided suggested steps in the forum thread at Some Windows 7 Operating Systems Cannot Be Started After Latest Update, followed by an FAQ topic: System crash after the recent AVG 2011 update 3292 (BSOD).
One AVG user reported the method at "Alternate Method" as successful with a failed repair disk.
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My favorite paid/licensed solution is ESET antivirus products.