I think I figured it out.... not sure..
What is seems to be.. The uploads folder needs to be 777, but is currently 775.
I tried changing it, but apparently i don't have permission... ?
Testing the avatar change form caused me to lose my avatar too...
So i looked for an alternative, i've enabled Gravatar.
wow thank you! i love you joedf! after all the ppl i have asked you were the only one who listen and understudy and even fixed the problem omg thank you sooo much!!!