Problem with avatar

Hello!
I have decided to write, cause I have a little problem with my forum.

I have managed to install it properly, add some mods, some style changes and all works more or less fine.
One bigger problem for me is that I am not able to upload an avatar.

I settled chmod to 777 (img/avatars), I settled in admin panel possibility ot add avatar, I settled size of avatar, but when I try to upload some for me (I have also tried with some other user id) it just do not work!

In firefox it is just schowing a little space where the avatar should be but isnt and in explorer shows empy table/avatar image with cross (a symbol of missing photo)

What can it be?