In the comments.php file, you'll find this code:
<?php if (function_exists('gravatar')) { ?>
<span class="ListGrav">
<img src="<?php gravatar("R", 25); ?>" alt="<?php comment_author() ?>"/>
</span>
<?php } ?>
Replace that with this code:
<?php if (function_exists('get_avatar')) { ?>
<span class="ListGrav">
<?php echo get_avatar( $comment, 25 ); ?>
</span>
<?php } ?>
There you go. No more need for the plugin. Also, the gravatar settings on Settings->Discussion will now work correctly.
As far as moving it around on the page, we will need a real link to your real live site. We can't diagnose a problem like that through a picture. We have to see the live code.