OK, I just changed mine so that I can remember and give you the right steps.
First you click on "update signature" which is on the left side bar of this page.
Then you click on the top where it says "edit my avatar or signature".
Then you open a new window go to tinypic.com and upload the picture, make sure you select "website/email" on the resize drop down...that's the size i usually use, but if you want it bigger you can go for the "message board" size.
after you've uploaded the picture copy and paste the link that looks something like this ~~ /> [IMG]blah blah blah[IIMG] but only copy and paste the inside information, leaving out the brackets.
so you take that "middle code" and paste it in here &use this same thing just insert the code for you picture....
<img src="PASTE IT IN HERE" />
I hope you get it...let me know if it didnt work.