For the little picture (avatar) you upload that as your Profile pic & it will also show up as the avatar. There is a reference to Avatar image in profile setting but this is not currently working.
To put in your profile pic go to "My Profile" then "Edit Your Profile". Scroll down to Profile pic and add. Keep size under 500 x 500 pixels. Also, image file should be a jpeg or gif. Click Save at bottom of page. If you can't see the change made, click F5 to refresh page.
also, i tried to upload them to a folder but it goes threw the process then it saves nothing.
The folder - Is this the Attachment option when you go to Add Reply for posting in the forum? Or are you meaning photo albums in your Profile?