My log file spits out

"C:\pebuilder313\BartPE\Programs\HandyRecovery\handyrecovery-fw.exe"
Error: SetupDecompressOrCopyFile "C:\pebuilder313\plugin\HandyRecovery\handyrecovery-fw.exe" to "C:\pebuilder313\BartPE\Programs\HandyRecovery\handyrecovery-fw.exe" returned error 5: Access is denied.

What does this mean?

It appears some process is locking the file.

Try starting from scratch and delete all of the current files and extract in the following order:

1. PEBuilder
2. UBCD4Win

And try rebuilding. If you get the same error try building either in safe-mode or disable your anti-virus and firewall software plus any other security software you may have running,

I found out AVG antivirus thinks that 'handyrecovery-fw.exe' is a virus 'Trojan horse Downloader.Agent.AQN', so it locks the file from being used. This is strange since it worked before. The only difference I know of is I downloaded the latest driver package.

It's a false positive, contact AVG tech support about it and it should get fixed. If you try and update the AV defs you may find it already has been fixed.

This false positive was resolved late yesterday... update your AVG virus definitions.