Avatar plugin - uploads fail after install

I just installed the Avatar plugin and am testing uploads but all upload attempts are failing.

I have re-uploaded all plugin files to /wp-content/ and /wp-content/mu-plugins/ as directed. FOlders /wp-content/avatars/user and /wp-content/avatars/blog both have privs set to 777. I have edited /httpdocs/.htaccess to be:

RewriteEngine On
RewriteBase /

#uploaded files
RewriteRule ^(.*/)?files/$ index.php [L]
RewriteCond %{REQUEST_URI} !.*wp-content/plugins.*
RewriteRule ^(.*/)?files/(.*) wp-content/blogs.php?file=$2 [L]
RewriteRule ^(.*/)?avatar/(.*) wp-content/avatar.php?file=$2 [L]

# add a trailing slash to /wp-admin
RewriteCond %{REQUEST_URI} ^.*/wp-admin$
RewriteRule ^(.+)$ $1/ [R=301,L]

RewriteCond %{REQUEST_FILENAME} -f [OR]
RewriteCond %{REQUEST_FILENAME} -d
RewriteRule . - [L]
RewriteRule ^([_0-9a-zA-Z-]+/)?(wp-.*) $2 [L]
RewriteRule ^([_0-9a-zA-Z-]+/)?(.*\.php)$ $2 [L]
RewriteRule . index.php [L]

<IfModule mod_security.c>
<Files async-upload.php>
SecFilterEngine Off
SecFilterScanPOST Off

Uploads fail with a warning on the crop screen and an empty crop frame after I upload a file from /wp-admin/options-general.php?page=blog-avatar.

Any help would be appreciated. Thank you.