Not 100%, but seems quite common for animated .gifs, and very frequent for .pngs.
Upload an animated .gif file, or a transparent .png file, and use it as your avatar. Check how it comes out in the following areas:
1) Thread posts.
3) Your profile.
4) The "latest" post pop ups throughout the forum.
Transparent .png not working. Shows correctly in forum threads, but not in his profile:
Animated .gif not working correctly; artifacts throughout the image, in PMs, threads, profile, etc:
For the images to work correctly.
Might be related to this compression bug: