My avatar is a gif. So that's not the problem. I believe it says right there, where you add the avatar picture the formats you can use.
If it shows up in the forums, the problem isn't the size. If that were the case it would not accept it at all. The problem is the chat itself. I have had issues where i have changed my avatar and the chats won't take the change. Even months later. I have no idea what causes this. But have heard of others having the same problem at times.
You can only have one avatar. So if you have the deer one you can't have a separate one for the chats.
Or when you say chat rooms do you mean the forums? A lot of people do that. They are two different things.
To change the format from gif to avatar you need to use some type of photo editing software. I think i have heard there are some to use online, but i don't know what they are, or if they allow you to change formats. I could change it. Would take me a few seconds.