I posted this when you raised this query on another thread - perhaps you missed it.
Try Dial-a Fix
I had the same problem as yourself (XP Home not Professional) and since running Dial-a-Fix the Windows Defender update has installed without a hitch. As I had already installed the Malicious Software Removal Tool manually I could not check if it had fixed that as well but I am hoping so - next month will tell.
By the way I believe that AVG will continue to support the 7.5 version till the end of the year.