BuddyPress.org

Do you have any other plugins installed that may have protected your uploads directory? Some shopping carts plugins, the sermon browser, and WP Super Cache (I think?) like to mess with the uploads directories, some even password protect them with .htaccess and .htpasswrd files to disallow direct linking to the files.

It’s strange that your avatar would appear only after deleting it. Do you have access to phpMyAdmin to see if the directory reference in the database is correct when you upload it? What does it look like once you delete it?