http://profiles.yahoo.com/ - go here to create a profile -> click "change photo" -> click "add photo" -> select the picture you want from your harddrive -> click "save". Now click "use selected photo", done.
Note: the pic has to be a .jpg or .png file, it must be smaller than 5 MB, and it also has to be square.
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The grey smilie face is posted by default as long as you don't post an avatar of your choice.
To create/change a Yahoo cartoon avatar go here:
http://avatars.yahoo.com/
Then go to: http://answers.yahoo.com/my/my_edit , click "use my yahoo avatar" -> scroll down -> click "preview" and then "ok".
For all other picture avatars:
http://profiles.yahoo.com/ - go here to create a profile -> click "change photo" -> click "add photo" -> select the picture you want from your harddrive -> click "save". Now click "use selected photo", done.
Note: the pic has to be a .jpg or .png file, it must be smaller than 5 MB, and it also has to be square.