Your profile picture is uploaded and is showing up in your profile.
You want to set an avatar.
Go to User CP ---> Edit Avatar ----> Select "Custom Avatar" -----> Upload from your computer or give the link of the picture hosted on some other website.
If the size of the image or image dimensions are larger than specified, then it will not be uploaded from your computer or the image hosted at some other website. Image size and dimensions are the key.
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