Same problem here.
I've been doing a change of webhost and an update from phpBB2 to phpBB3. For the avatars of our members this meant that I transferred them to a new directory where the present test set-up is installed (with a different URL path than the previous installation, which will prove to be important in a moment). While everything else works perfectly, I can't get the transferred avatars to show up.
On the other hand, when I upload a fresh avatar for such a case, there's no problem at all. So I know for a fact that it's not a CHMOD 777 issue (since the new avatar can be uploaded AND viewed), nor is there a problem with the folder path settings as set in the ACP.
Also, I've transferred a couple of avatars that were in an extra directory called "gallery personal". These also show up fine. The difference with the other avatars is that these were pre-installed on the previous board installation.
I believe the problem of transferred avatars not showing up, has something to do with the fact that the not-working avatars were originally uploaded by individual members, where each avatar gets an ID number. It looks to me that somehow the script is unable to handle those files having been moved to a directory with a different URL path (even if it's the same relative to the top directory of the forum installation itself). That's why when MidnightLich moved his entire board to a (new) subdirectory, things stopped working.
Somehow the avatars have to be "re-synced". Who knows how to do this??