WP 3.0.5 Avatar Plugin

Hi,

I've just installed Avatar on a fresh multisite instance (WP 3.0.5)

When I go to upload a new avatar
- the file uploads fine
- displays the crop screen with the image (the image itself is positioned slightly wrong but not a major issue)
- I crop then get message "Avater Updated" but no avatar is actually displayed.

If I click on alternative upload I get the following errors + some others

There was an error uploading the file, please try again.
Warning: imagecopyresampled(): supplied argument is not a valid Image resource in /public_html/wp-content/plugins/avatars/avatars.php on line 762

Any one having the same issue?

I did just notice that the plugin says it is compatible with version 3.0.4 only - would that be the issue?

UPDATE - just investigating some more. It appears to be creating the avatars fine but the URL when trying to display the images is incorrect e.g. it is trying to display

http://domain.com/avatar/user-5-96.png

instead of

http://domain.com/blog/wp-content/uploads/avatars/user/e4d/user-5-96.png

Why is this? Fix?