I feel the topic subject about sums it up but where do I put these files within the install directory? I can't find anything. And sorry if someone has asked this but I haven't found a post or anything about it.

You don't use the avatars in the game. Avatars are extra content that you can download to use elsewhere. Some games include extras like avatars, wallpaper, or music, You can save the avatars anywhere you want. Avatars are just square images.

Avatars are used when you join forums (like this one). When you set an avatar, It appears next to your user name. People can even make their own avatars if they know how to use image editing software.

If you want to use one of the unreal avatars as your avatar / profile pic on this forum, you need to download and unpack the zip file they come in (wherever you want on you hard drive).

Click on the Account text above.
Then click on Settings.

On the upper left next to your user name, there is a square with the portrait outline. Hover your mouse cursor over that and text will pop up that says "Change Picture". Click that text.

Now, click the camera icon that appears over your current avatar (the plain portrait outline). Now you can find the avatar file on your hard drive that you want to use. Select it and it will become your new avatar.