You can't directly upload an avatar image (security reasons... i.e., someone uploading a malicious program instead of an avatar).  You can do one of two things:

1) Have your avatar hosted on some other web site, and link to it from here.  In your profile, put the web address of where your avatar is.

2) Send the avatar picture to me, and I'll host it here for you.  This lets me verify that it is indeed an avatar picture and not the Anna Kournikova virus.

Foul