If you want to, upload your image onto an image hosting site. You can get past the size limits for the avatars there. Of course, you still have to adhere to the dimension limits.
Right. The legal size for any avatar is 125x125 pixels at the max. Your picture there is 160x120, which means that it is too big. If you were to downsize that avatar so that the length is 120 pixels as well, you'd be fine.