It needs to be 100x100 pixels max officially and a .gif .jpg or .png file I think. Did you perhaps insert a higher resolution one or with a different ending.
I find a decent picture, I re-size it using windows default tools to 100x100 and save it as a gif.
I then use the tm-img server kindly provide by Peter (Gamb...) to upload it.
I take the default link (not the BB link you normally use in postings) and insert this in the file location under the settings menu.
