upload == send something from your computer to another
download == receive something from another computer to your computer
Your image should be a .jpg, not a .bmp or a .gif
Use an image editor (I use gimp, but there are a number of less-featureful ones out there) to resize the image to 80x60 pixels. Its not much, so don't try to use something with alot of detail (like text).
Save it somewhere on your local computer, make sure it is saved as a .jpg
Login to the photo server and select 'Avatar/SigPic'
Click on the 'Browse' button and find the image you just saved and click ok when it is selected. You should see the path to it appear in the box next to the browse button.
Click on 'Upload and Save' and you should see it show up on the photo server.
Gimp for Windows is
available from here, make sure you download the gimp installer and the GTK+ 2 runtime environment.
As for other image editors for Windows (assuming that's the OS you are using), I don't have any suggestions. PCR or GMW probably do.