I uploaded one pic to it and didn't see it as an option when I tried to change my avata.  Do members see the image and are able to select it as a preloaded avatar?

By the gallery do you mean the tons of photos available when you enable the gallery?

I meant the custom avatars. I figutred out how it works, but when you select the avatars to change to one in the gallery the preview pic is cut down. Part of a the right side of the avatars is gone. Changing to the new avatars shows the pic correctly. Is it normal for the preview to be cut down?

It depends on what theme and version our forum is.