When the social connect plugin is active on the page, for example in the login box, and ton the registration page there the possibility to the upload an avatar/image the upload always returns a img404 (I was expecting a text string instead of code here). If the social connect plugin is disabled or the plugin is selected not to show on the registration page then the error goes away.
However the avatar upload should work when the site is configured to show the socialconnect buttons on all page.