Cannot Upload custom profile pic?

I recommend that you sign into your Microsoft account on the Xbox console, use Profile & system and open My profile.

Use customize profile then, use change gamer-pic. Open Upload a custom image, then select the image.

Personally I do not use a custom image as a gamer-pic. I have no images saved on my Xbox console as files, to upload as a custom gamer-pic.

custom gamer pics were suspended, but now we are allowed to upload custom pic

Currently there is no way to allow child accounts to upload a custom pic.

Does that mean there is also no way for a parent to upload a custom pic to be used for the child account?

You can use gamerpics found on the marketplace or of your avatar. Players who have the XBL Vision camera can take photos and use them. But pics cannot be uploaded and used as profile pics

The ability to upload custom profile pics was disabled at the beginning of the covid19 outbreak, in order to reduce the strain on support staff, as each pic is moderated before being accepted. Once things get back to normal, the function will be reinstated.