Hey there, spry about the delay -- at pax east. The problem you are having is almost definitely that you don't have proper permissions to your avww folder. Avww requires that you have full admin rights to that folder, but windows doesn't grant that by default on window vista and 7 even if you are an admin.
What windows seems to do in this situation is to not deny programs writing to that folder, but instead has them write to a shadow folder that is retained for the execution context of that program. So when your games save, it goes to the shadow folder, and you can reload them, etc. When you download the updates, that's also where they go.
However, then the updater program is launched, and it runs in a way that it looks to the actual folder mentioned, and not the shadow copy. So, naturally, it finds nothing and fails.
When you have proper access rights to that folder, two things will happen: first, you'll be able to download updates with no problem; second, you'll lose all access to your settings file and savegames, because windows will detect it doesnt need to look in the shadow folder anymore. Thanks windows.
But the good news is that those files do exist somewhere or other in your c:\users directory. If you search for the name of your world, or for settings.dat, you should find the shadow folder and just be able to copy those files into the real folder. If you happen to have the name of the specific folder in question and don't mind sharing, that might be helpful to other players, actually -- up to you.
The root of the problem is that impulse apparently did not set the permissions properly on your folder when it installed the game. Our installer does this, but I'll have to talk to them about he permissions and make sure that happens through their client also. Thanks for letting us know about it!