Well, I finally got my Yahoo avatar to appear on my blog.
I do think the instructions for posting the avatar need to be more explicit than they currently are. Specifically, instructions on how to make the avatar and then how to "Export" the avatar including the simplest options for making the avatar available for the blog. (I think the URL option seems easiest.) Then once you get back to Blogger rather than using Edit HTML to customize (add the avatar URL) just do it from the main customize page.
I realize it's kind of fun to explore and make mistakes in the process of learning but we need to consider the frustration level of folks who are going to be using the program as well--we don't want them turned off too early in the process!
BTW, I just discovered that Blogger is now available from school, which is really helpful. It had been blocked earlier by our filtering software.