While malware can stop AV, it is much less likely in WIn7 vs. XP due to kernel changes. It would have to be fairly sophisticated.

>In your post to Craig you mention testing various software. That should all be done in a virtual environment, protecting the host o/s. Look at https://www.virtualbox.org/ (amongst others - this one is free).
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>In the meantime you will need to sort out the malware infection which you probably have. Personally I suggest wipe the machine and install Windows 7 clean. it can be done in an hour and then restore your other apps etc.
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>If you have had multiple number of infections (from your post above) then your entire machine is totally untrustworthy and you should defintely not be delivering software to clients or other end-users. And yes, many malware will prevent AV from operating properly and prevent Windows from running it's own updates and other o/s operations including activation issues.