Instructions
Go to the Xbox 360 dashboard. Choose the "My Xbox" section. Press the "A" button after scrolling to the blade that contains your username.
Select "Customize Avatar" to tinker with your character. Use the options to change various features of your avatar. You can switch facial features, or style your avatar by dressing him in various outfits.
Choose "Gamer Picture" from the menu of options after you customize your avatar. Use the controls to line up your photo. The left stick zooms in or out on your character. The directional pad will pan the camera to the left or right. Use the left and right triggers to rotate your character to the left or right. You can also change the background color by pressing "Y" to cycle through the choices.
Press the right bumper or "A" when you are ready to take the photo.
Hit the "B" button to exit this screen. You will be asked if you want to save the picture as your gamer picture. Press "A" to confirm.