it does need to be online - if you have a picture and you don't want it to be distorted and made a bigger size, upload it to photobucket.com - that site keeps photos at their original sizes instead of resizing them like snapfish and shutterfly do.
then you just add the link to the box in your profile and select how big you want your avatar to be.
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"to be nobody but yourself in a world which is doing its night and day to make you everybody else, means to fight the hardest battle which any human being can fight, and never stop trying." - ee cummings
Ok just upload your picture on photobucket where it says add image. Then after it uploads it gives you codes under the picture. Just pick the first set of codes and come to your profile and put it in the code box. Just cut and paste. Let me see if I can do some screen shots for you in a post.
Ok here are some images to help you:
Photobucket:
highlight and copy the code in the first box under the picture (URL) and put it in the Avatar URL in StyleThread.