Error 0x80070005 basically is "Access denied" error. There are some permission issues here.
I checked AVG log, and bunch of other registry keys were created.
For some reason, AVG is denied to create a new key in:
HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows NT\CurrentVersion\Windows
Go Start>Run, type in:
regedit
Click OK.
Navigate to the above key, and post a screenshot of right pane listings related to the above key.