At the top, right of your screen you'll see your handle with a pull down menu arrow next to it. Click on the arrow. The menu that drops down will have a selection called Avatar. Take a look at it; if you need more help let me know.
As for posting pictures, when you see a picture on a linkable web site that you'd like to post, put your cursor over it, right click and Copy Link Address. In the Boneyard, click on the icon that looks like a tree (it's on the line below the emoticon choices). When the dialog box opens up, paste the link address there then post. No formatting needed.
If you want to post a picture from your hard drive, click on the Upload a File button to the bottom right. I haven't personally tried this but I'm told you can upload a file from your hard drive this way.