Are you trying to upload a profile picture or an avatar? They are different and need to be sized differently. A profile picture is larger and only seen when someone views your profile. An avatar is the little picture below your screen name in your posts.
Note: The maximum size of your custom image is 300 by 300 pixels or 64.0 KB (whichever is smaller).
Avatar: Note: The maximum size of your custom image is 120 by 120 pixels or 19.5 KB (whichever is smaller).
In UserCP... you'll see two separate links for uploading. Depending on what you want to do.
If you continue to have problems, let me know. I'll help if I can.