After googling, I found a thread at Ubuntu forums discussing the same problem but they instead found the viruses in their Ubuntu partitions. This lead me to the thread at AVG posted by Adam Hunt.
While it certainly is possible that what you are seeing is a false positive... first let me correct something you said... Just because a malware may not spread on a Linux ( or other OS ) system, doesn't automatically make the item a false positive. A compromised system could still be used to store and distribute other malware even if that malware may not directly affect the system it is on. This is why AVG and other antivirus programs still look for Windows based malware on a Linux box ( and visa versa ) .
If you suspect a file to be a false positive. Test the file at [virusscan.jotti.org] and if it is a false positive, archive (zip, arc, tar etc) the file using a password and email a copy to email@example.com with a brief description as well as the password you used to archive it with.
If it is a false positive , turn off hueristic scanning for the time being. When Grisoft adjusts the virus defintions you can turn it back on. If you are unable to still test/email the file after disabling the hueristics, you will need to temporarily disable the Resident Shield.
Sorry for the delay in taking care of this issue - meetings intervened.
As you recommended I scanned several of the files at [virusscan.jotti.org] that AVG picked up as infected with WIN32/PolyCrypt and only AVG detected them as infected. The rest of scanners indicted "nothing found".
I think it is likely that we have a "false positive" here.
As you have asked I will try to package up one of the files, password protect it and send it to you at firstname.lastname@example.org. The infected files all seem to be binaries, so it may take me a bit to package them to send to you.
I have the same AVG virus definition file installed on my Windows XP PC and have scanned that PC with no infections found. I believe that this is not a "virus issue", but is an issue of the last definition file's compatibility with Linux instead, judging by the number of Ubuntu users with the same problem at [ubuntuforums.org] . Perhaps this thread would be better moved back to the Linux section of the forum?
Thank you for your time on this. I hope that this will help you solve the issue in a future definitions update.
In conclusion, it seems like this is an issue with AVG virus definition file and the result is false positive. The detected files won't do any harm to the computer. I will wait for the next AVG update to correct this problem.
Note: What is a false positive result?
Occurs when the system classifies an action as anomalous (a possible intrusion) when it is a legitimate action.
When a test wrongly shows an effect or condition to be present (eg that is woman is pregnant when, in fact, she is not).
Some women are told that tests have shown that their baby may have a problem. If further tests then show that this is not the case, that result is called a false positive.