You have to click on settings and either choose from one of the library avatars. Or, you can find one on the internet, upload it on either photobucket or imageshack, and copy the html code into the "change icon" box. Then go down to the bottom and click save settings.
I hope I explained that clearly enough. OH! And you can't have your avatar no more than 250 kBs, otherwise you get shadow banned.
EDIT: Also, a lot of the images you're trying to use in the library no longer work. You'll probably need to find another one mate.