Complete Stop at boot can be related to Heat and hardware failure which should be investigated.
Have you opened up the case to assure that it is not clogged with dust bunnies and that the fans run freely?
However, since you refer to the instance of a few major system files being identified and locked away by AVG, I will also proceed with a recommendation that follows the path of operating system repair.
Let us know what you find with your visual inspection.
Is your version of XP home or pro?
This can be a relatively long and labor intensive fix.
AND since "AVG placed explorer.exe, lasass.exe and 3-4 other system files in the VAULT" you can pretty confidently believe that you have encountered a serious infection that may still exist and repeat the problem again and again.
The most hopeful and easiest route to take will be if you can gain access to System Restore from a Command Prompt as follows:
I am hoping that you can use the F8 key at boot to Boot into: SAFE Mode with Command Prompt
If you can, then follow the instructions, here: http://support.micro....com/kb/304449/
There are additional steps that "might" succeed by extracting and replacing the important files that AVG locked away in the Vault by Extracting and copy/pasting the originals from your installation media.
But if you get to that point (if System Restore from Command Prompt doesn't work) you may want to re-examine your choice about doing a complete re-installation of XP, particularly if you cannot get the machine running long enough to visit our Malware Removal Forum.
No tech ever wants to make these kinds of "last resort" recommendations.
I wish there was an easier answer.