The services.exe is a white-listed system file which cannot be removed (it is crucial for the system operation). It needs to be replaced with a clean copy, if it is infected. Please see this AVG Forums discussion thread. Please note that if the services.exe is detected with a PID number following the file name, there's no need to replace the file; the system may be infected by a rootkit in that case.
The update issue could not be related to the infection found. If it persist, after the infection is removed, please see this FAQ article. Should the update be non-functional after following the FAQ, please run AVG repair installation (instructions for AVG Free Edition | paid for versions).
Please let us know whether both the issues are resolved.
I know a LOT of people are gonna read this and say,duh,that's old news,but,I've tried several things to no avail.My problem:Several times during a session on my Dell Inspiron Windows 7 Home Premium SP1,4GB Ram,500 GB HD,a box pops up from AVG.It says:file
Windows Syst32 services exe.threat:Trojan Horse Dropper Generic c.MMI.In the box it says ignore this threat,it will stay where it's at,without harming anything.It gives NO option to vault,or delete.Happens a LOT.I can still browse the net,and go to the sites I need to,BUT,I can't gain access to Windows Updates,or Windows Firewall.Says there is a problem,and Updates won't run at this time.Am I DOOMED,??