you can use AVG RescueCD to scan and remove infections from mentioned computer without AVG installation. As it is possible the infection is actively affecting the Microsoft Windows Installer.
If the installation issue still persists, please provide us (upload to online storage) with AVG installation logs.
Working on a friends XP Dell laptop. Seems to be infected with several virus but the current program on it is not working due to upgrade needs. I'm going with AVG but when install it I get an error of MSI engine failed to install product.