Well, it seems that the new update makes the AntiVirProActiv component - not present only in the company's free offering - erroneously detect critical Windows processes as malware and automatically terminate them.
It also blocks other popular Microsoft and third party software, and sometimes even prevents Windows from booting at all.
Editing this topic to add the suggested fix:
If you can manage to boot into Windows (try Safe Mode), here are the instructions for disabling ProActiv:
1.Bring up the Task Manager. Hit CTRL + SHIFT + ESC, right-click on the task bar and choose “Start Task Manager,” or hit CTRL + ALT + DEL and click on “Start Task Manager.”
2.Click on File, then “New task (Run…),” type “c:\program files\avira\antivir desktop\avconfig.exe” or equivalent, and then click OK. This will open the Avira Antivirus configuration window.
3.Click on the Expert mode switch at top left.
4.Click Realtime Protection on the left panel and then on Proactiv. Untick the check box for “Enable Proactiv” on the right. Click Apply.
5.Restart your computer.
Again, this is not a final solution. Avira has released an update that reportedly fixes the issue, but users are still having problems. The moderator says the update fixed the issue for him, but not everyone in the threads agrees.