OK, when you're logged in, you'll see a link at the top of the screen that says
ProfileClick it.
This takes you to a screen where you can set up all your options and configuration stuff. Scroll down to the bottom, and you will see a section that explains all about avatars. At the very bottom, right above the 'Submit' button, is a button that says 'Show Gallery'. This takes you to the avatar gallery, which also has a drop down menu for selecting more avatars to choose from.
Your avatar never changes unless you change it yourself. Only the rank (ie, the shield count) changes, based on your number of posts. The reason you're starting to see the grey shirt-opening-to-reveal-the-S avatar, is that I've reconfigured the forum so that if a registered user doesn't choose their own avatar, they'll get this one as the default - instead of none. The grey phone booth avatar that you see in the mailbag section is the default for non-registered users.
I hope that answers your questions, if not, just ask some more. :-)