for some reason do not know if its the hurricane but I try to upload an ad to your site and it just says connecting and thats all that it does.
The code that updates the category avatar is very specific you can check it out if you want in image-inc.php.
Content visible to verified customers only.
Basically what that code says is it gets the category thumbnail id whether it be a numeric id or url in your case.
ONLY if it is equal to 0 would the code update the thumbnail to that last ad uploaded.