AVG deleted one of my system files (some thing about is being corrupted) and now windows won't boot at all. I tried using UBCD to access AVG's virus vault were it puts the deleted files but I could not. Is there a tool on UBCD that would allow me to fix this?

You didn't say what system file was deleted... its hard to make suggestions without much info.

I suspect your system was infected or you wouldn't have been scanning... so don't be so quick to blame AVG for doing its job. Its also possible that it was the infection that may still be to blame for the other issue with Windows booting but its hard to say with so little info to go by.

When you ran AVG from UBCD4Win you were asked if you wanted the temp files on the C drive or the temp drive... if you answered the C drive... then running AVG again should give you access to the Virus Vault items... if you selected the temp drive then they are gone and you would need to restore the file in question from a backup or from the Windows CD itself.

Also note... not all files that are in the %Windows%\System32 folder are Windows system files... other programs as well as malware will place files there also.