Elevated privileges

UAC threshold could have been elevated.  Hit the windows 7 button (aka start button) and type in UAC (User Account Control).  Might have to lower the bar.

Checked that... it is at the second level.
I'm not aware of a setting to automatically set this for all programs...

For example, I installed Hit Man Pro to scan and it has the UAC shield on the icon.  All programs do.

When the computer boots you have to give AVG permission to run.

Parental controls are not on.

classnet --
You could run a System Restore from a date prior to this starting.

You also could consider allowing each problem program to start "as Administrator"
http://technet.microsoft.com/en-us/magazine/ff431742.aspx

Sys res fails.
Would like to fix the issue

classnet--
Did you try
You also could consider allowing each problem program to start "as Administrator"
http://technet.microsoft.com/en-us/magazine/ff431742.aspx   ?

When System Restore fails and in view of the privileges problem you are having, it may be quickest to run a Repair Install.
http://www.sevenforums.com/tutorials/3413-repair-install.html
This should not affect your personal data or installed programs, but a backup first never hurts.

I assume you have no backup dating before the time the problem started.

you said system restore fails - but when?  does it start or not? or fails at the end?

you can always run sfc :
 http://www.sevenforums.com/tutorials/1538-sfc-scannow-command-system-file-checker.html    

or run a chkdsk on the drive

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