Now I see... Photoshop7 is a problem, because there are no Smart Objects... Workaround: when you have your Avatar image in a new File, klick on image/image size and give it at least 180x180px and save this image and now you are able to upload it. Better way is to have a bigger Square Image to start with and use it for the Avatar instead to scale a small one... I will check if I can make a simpler template... and if I have time a Video ;)
Now I see... Photoshop7 is a problem, because there are no Smart Objects... Workaround: when you have your Avatar image in a new File, klick on image/image size and give it at least 180x180px and save this image and now you are able to upload it. Better way is to have a bigger Square Image to start with and use it for the Avatar instead to scale a small one... I will check if I can make a simpler template... and if I have time a Video ;)