I had this same question.  This is what one of our generous and helpful members gave me.  Hope that it helps.

If it's online, just copy the address of the picture and paste the address in the Avatar section of your profile



And there it is.

whatever you pick will be scaled down to a max 100x100 pixels (the size of mine) so careful to use something that's not too big as to require massive download time, and also note that if you have something that is wider than tall, it could be squished and distorted. If you have this problem, toy with the size settings in your avatar profile. This should fix it to look proper.

If the image is on your computer, go to a service like Imageshack and follow the directions. This will put your image up for all to see, and let you link to it in your avatar profile. It will also scale down a large image to avatar-friendly size. Once you have it up just copy and paste as per above.