I found the problem/solution. It is a simple typo in the changebasic.inc.php file (in /scripts).
I outlined the change here:
UBBCentral For everyone that doesn't want to click on the link (and have to scroll down)...
Find:
$imagehw = getimagesize("{$config['UPLOADED_AVATAR_URL']}/$Picturefile");Replace with:
$imagehw = getimagesize("{$config['UPLOADED_AVATAR_PATH']}/$Picturefile");Basically it is a typo, changing 'UPLOADED_AVATAR_URL to 'UPLOADED_AVATAR_PATH.
Change this 1 line, resave the file and your gold, no need to change or remove any of the size stuff anywhere else.
Edit: One last thing, this only fixes the future avatars, any that are currently uploaded by the users need to be reuploaded. This is because a size of 80x80 is already "set" in the user database because with the typo it couldn't "find" the file to check for file sizes so it put the max (80x80). Having the users reupload their avatars after you make this change will correct it.