I too have lost everything I had on iTunes since this last update.
I find it strange that after 8 years of running AVG free with iTunes without any problem whatsoever that suddenly this last major iTunes update should cause a conflict between the two. It seems to me that it is iTunes at fault, not AVG. However, I shall try the suggested course of action but really, was this an update too far?
There was nothing wrong with the previous version which everyone knew and loved and to lose everything we had stored on iTunes is really not good enough. Why should we go through the hassle of the suggested fix when all would have been fine if the programme had been left as it was.
Thoroughly p***** off with iTunes
I can't say catagorically that AVG is at fault in your case, but at least one noble soul rolled back to iTunes 10.7 as a test and waited until the library disappeared again, which it did. Removing AVG resolved the problem. I've discussed the potential mechanism elsewhere and it does seem to tie in with an update to AVG's engine. They appear to acknowlege the problem on their forums and have since released two patches, however neither seem to have resolved the problem completely for everyone.