I'm on a multi-site network. I uploaded the plugin to the mu-plugins folder, and moved the avatars.php file to the root of the mu-plugins folder.
I created a folder for avatars, and assigned it (CHMOD) 755 permissions.
I activated the upload feature in the plugin, and told the plugin the path of the avatar folder.
Then I logged out and back in as a regular user, and uploaded an avatar.
I know the file got uploaded, because the file is now there on the server (visible through an FTP program).
Yet, in WP an error message was shown: "Upload error: File upload failed."
The avatar does not show in WP.
I know the file did get uploaded successfully, because not only can I see it with FTP, but also I manually browsed to its location and it shows in a browser just fine.
Also, the plugin did store the path to the uploaded file in that user's record: When I view the admin page (at wp-admin/ms-admin.php?page=add_local_avatar&userspage=2) the path there shows just what it should for that user's avatar.
I then moved the "avatars" folder to the web server root (public_html folder) and retried an upload. The error message still showed. However, the avatar displays this time.
Some users panic when they see an error message, and some would get caught in a circle of trying again. I'm likely to remove this plugin unless someone knows how I can get it working smoothly.