First up, Internet Explorer. The upgrade that installed was for Internet Explorer 7.0. You can uninstall that to go back to your previous version by going to CONTROL PANEL and then ADD OR REMOVE PROGRAMS.
There should be an entry for "Windows Internet Explorer 7." The list is in alphabetical order so you'll have to scroll down to find it. Click on it and then on the REMOVE button. Follow the instructions from there.
If you want to keep IE 7 but just show the menu bar (File, Edit, View, etc) you can. Open Internet Explorer and press your ALT key. That will show the menu bar. Click on VIEW then TOOLBARS then MENU.
I don't really know why some of your favorites wouldn't work, though. I also don't know why fonts would be screwed up.
For the Avatar part, you're talking about making an icon that you can use on your profile here? Those are usually just pictures that are scaled down to a certain size.
My answer for that, and for resizing pictures might be the same; Irfanview (http://www.irfanview.com/
It's a free tool that will let you resize, crop, convert and save your photos.
Let's say you wanted to do a screen capture of a window you had open, you would make that the top window, press ALT+PRINT SCREEN and then open Irfanview. Choose EDIT -> PASTE and it would fill in the screen you just captured. Use your mouse to draw out a selection box in the window and choose EDIT -> CROP SELECTION. Everything inside the selection you created would stay, everything else would go away. FILE -> SAVE and save it somewhere.
Posting to the site you mentioned...Not 100% sure on that. Once you have your file saved if that site allows you to upload then you can do it from their site. If you're looking to host the file on-line somewhere else then Photobucket maybe?