Do you have a Photobucket account? It's easier to upload pics from your PC to Photobucket and then copy and paste the address to the other field.
I have a MAC, so I don't know if maybe mine operates differently than yours...but I just changed my avatar and everything worked. I do not think your image is too big, but I can't seem to find where the problem would be.
I would use a Photobucket account and then copy the "direct link" link....and paste it into the other field available.
I;m sorry that probably didn't help at all.