Are you sure it actually removes the animation from the image? From what I've found when looking it up, it seems like the Windows 8.1 update just broke the Photos app to make it unfriendly to animated gifs, rather than it actually altering/ruining the file itself. You should try saving a gif to your computer, then test uploading it to something like Imgur, and if it retains its animated properties on Imgur then your computer didn't do anything bad to it and you ought to be able to upload gif avatars to Iwaku just fine. Alternatively get a different image viewing program, such as Irfan View, and try opening an animated gif file in there to see if it plays properly doing what Izurich suggested, because that's a lot simpler, haha.
If that doesn't work, then I dunno what's going on and you should probably contact some kind of tech support because that's very strange and should not be happening.
Either way though, I forgot to mention that I do agree we should be able to use a URL to upload avatars. It's just so much more convenient.