Avatar
Click on the profile button, just to the right of the logo at the top of the forum page, scroll down to avatar and either click on the browse button and select a suitable graphic on your computer OR fill the web address of an existing graphic you want to use. The graphics do need to be reasonably compact and less than around 6kbytes.
If you have a graphic that is too big, use a graphics program to scale it down (if it is suitable for scaling). There are compression programs to reduce file sizes but most graphics packages do a good enough job.
For photo type images you probably want to use JPEG (.jpg) format. On saving in jpeg you can generally reduce the quality of the image to get a smaller file size.
For more cartoon/simple graphic type images use .gif format.
html
No, you cannot turn on html. Most forums disable it to stop people breaking things.
Forum
It is very easy to set up a forum. This forum uses the free open source software phpBB - there is a link for this near the bottom of the page. However, a lot of money has been spent on top of the free software to provide a good look and feel and a number of extra features.
I run several forums. One uses a preconfigured version of phpBB with lots of extras. See the link at the bottom of
The Sewing Forum for Integramod. I also run some forums using commercial software like
vbulletin.
You do need web space that provides PHP and mySQL services. PHP being a server side programming language and mySQL a database system. Both of these products are free. There are many web hosters on this forum that can provide you with everything you need ready to go.
Stuart