You can fix this bug fairly easily, if you want - assuming it is a bug, I don't know the Menoth rules well enough to comment.
(Be sure to back up the data file before doing the following, just in case - I don't guarantee anything - it breaks, oh well)
File the data file where AB is installed, if you have Windows 7 it will be C:\ProgramData\Army Builder\data\warmachine, somewhere in C:\program files for XP.
Open protectorate.dat in notepad.
Search for "Avatar of Menoth" in the file
Look down about 40 lines, there will be an line with "<member>FALSE</member>"
Remove the line.
Switch Game system and select Warmachine.
AB will rebuild the data files.
The Avatar will show up in the main list of units.
All fixed.