I appear to have found a solution to the i7 not working that doesn't involve having to use only one thread... it's not a perfect solution [if in fact it is a solution, I have only converted one video since trying it, but it appears to have worked] , but it's better than single threaded, and should work until AVS can fix it in the next version. *fingers crossed*
All I did was go into task manager and set the affinity of the avs video converter application to use only cores 0, 2, 4, & 6. By alternating the cores selected my hope was to have one thread per core running, and that appears to have worked as well. It's not nearly as fast as a full i7, but it's MUCH better than single threaded.
Good Luck.