Your avatar pic needs to be no bigger than...I think it's 90x90 pixels..you can opt for 'I will upload my own picture' and you then click on 'browse' and chose the pic from your own stored on your PC. Or chose 'I have my own pic' and for that you will need to upload a suitably sized pic from something like photobucket or flicker...
It doesn't always appear immediately though once you've uploaded. It may take a few mins..well it has for me in the past anyway.
The delay when uploading avatars
should be fixed now... I hope...