Well first of all you would need to convert the image to a .gif file.
The main issue you have in front of you is getting the file under the 75kb file limit ATS permits on avatars. Also, they must be within the 160x320
pixels.
If I want to make an avatar using something from a movie, I play the movie and pause it where I want to grab the image then take a screenshot with a
utility that does that. Then you can edit it in Photoshop or other image manipulation program.