I see a lot of people are viewing this thread, so it must be a wide spread issue. It is unlikely that the file "avgwdsvc.exe" is infected. An update probably just caused an issue. I'd suggest performing a complete un-install and re-install (see the link in my signature below). You can access the latest AVG 9 files here: http://www.avg.com/us-en/download-9
If that doesn't work, or if it does until the lastest auto-update gets applied, then everyone should report it directly to AVG by opening a ticket so they can resolve it through an official update.
For those of you with larger installs, you should really consider upgrading to AVG 2011.