A virus in the restore folder will not affect your system in any way - UNLESS you do a system restore. The virus will eventually get overwritten as new restore points are created. So it's not essential that you do anything about it (but remember you may get the virus if you do a restore).
What you should be worrying about is how AVG let the virus get past it and into the restore folder in the first place!
For the only AV program that's not missed an "in-the-wild" for several years click here