BuddyPress.org

@MrMaz I’ve got some good news for you. While I still can’t get the avatars to work via the thumbnail chooser, I have gotten avatars to work on a single wordpress install when choosing to “Customize” the link’s avatar. In my case it can crop the image and upload the thumbnail and fullsize pic to /wp-content/uploads/link-avatars/

In case this helps anyone else… I had to use the “Full URL path” in wordpress’ Settings > Miscellaneous to get BuddyPress user avatars to upload (in case someone wants to use a different avatar than their Gravatar)

Full URL path example: http://www.mysite.com/wp-content/uploads