Yes you can link to images on another host. Just use
Code:
<img src="[high]FULL URL TO IMAGES FOLDER[/high]/$post[usergroupid].gif" alt="<phrase 1="$post[username]">$vbphrase[xs_avatar]</phrase>" border="0" />
in place of the image code in the postbit and
Code:
<img src="[high]FULL URL TO IMAGES FOLDER[/high]/$userinfo[usergroupid].gif" alt="<phrase 1="$userinfo[username]">$vbphrase[xs_avatar]</phrase>" border="0" />
in place of the image code in the memberinfo template.
so if your images are at
http://www.mysite.com/files/graphics/avatars then this will be what you place where it has [high]FULL URL TO IMAGES FOLDER[/high]
Please can you also put your code in the above post into [ code][ /code] tags. Thanks.