What I did:

Found a pic on the internet
Resized in paint to 100p x100p
Uploaded to this site

The image appears on my profile, but it said "Error uploading" and won't appear as my avatar.

Wut?

What filetype did you save it as?

First of all, resize it to 80 x 80. That's the max over here.

Is it saved as the wrong file type? Make sure it's PNG, JPEG or another common one.
Did you try uploading it on Imageshack instead of a direct upload? That might help.

If neither of these work, the file itself might be too large to use as an avatar. I don't believe this is the case, but in the event that nothing changes, you might just have to search for another choice.