To use your avatar in the chatbox, you will need to register at Gravatar. It's free and doesn't take long. Follow these instructions.
Click on the Profile link located at the bottom right corner of the chatbox
Choose the Gravatar option
Register at the Gravatar website, click Get Your Avatar Today
Enter your email address, (ignore the Forgot Your Password link) and click Sign Up
You should see this confirmation screen with your email address on it
When you click on the confirmation link in your email it will bring you to this page, where you can upload your avatar
I showed it the image from my hard drive, but you can choose other methods
Success! Now your chosen avatar should show up beside your username on the chatbox.