I have AVG running on 3 of my systems and have never had an issue with it. I have recommended it to my parents and in-laws.
As for firewall, if you have an old pc you should look at Smoothwall. Mine is running on my very first purchased pc (P150 - oc'd 180MHz). You just need 2 NIC's installed in it. You can even run the software on a floppy which can be write-protected so you never need to worry about someone messing with settings.
I absolutely love it! And it was a snap to setup.