Go to your UMA Profile. Under "Modify Profile" click on "Forum Profile Information", check the box for "Specify avatar by URL" and add the pic's URL (URL should end in .jpg. or .gif), then click on "Change profile".
If you don't want your avatar to be distorted, it should be trimmed to a square. You should check to see what your pic will look like at 100x100 pxls (and resize to that, if you want) before uploading it. If you need a place to host your photo, http://imageshack.us/ (http://imageshack.us/) is a good one.
(http://img43.imageshack.us/img43/3347/ab6n.jpg)