Usually your avatar will be a blank silhouette and it will tell you, you need to install an update to use them. All you need to do is download this
update file, and place it on a USB flash drive, and plug it into the back usb port of your xbox. Your 360 should detect it and install it. Make sure you extract it first and the root of the drive is the $SystemUpdate folder. You can also burn it to a CD to update.
If you're paranoid you will brick your console because microsoft is out to get you and ruin your homebrew, you can look at the picture about removing the r6t3 resistor to keep from having your fuses blown.
I also provided a mediafire mirror in case the microsoft one goes down.