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I just looked in my User CP and it says, "The maximum size of your custom image is 500 by 100 pixels or 9.8 KB (whichever is smaller)." Those are weird limits. Just host it at photobucket.com or imageshack.com and wrap the [img][/img] tags around it.
the only thing i dont like is how it subcribes you to everything you post in. Now if someone tells me how to fix this i will be happy. Plus the format will get better the site will get better as the days go on