It seems like you are doing it correctly. Although maybe just add a new file first, don't worry about deleting. Also there are TWO update buttons on that page, try the top one. If that doesn't work try the other. This site has been going downhill in it's maintenance I'm sorry to say.
Is the photo supposed to be a cat with purple hair or something else? I know last year when I tried to change my blog photo it actually did change for everyone but me and I had to go delete my history or my cookies or something before it showed up. But I've also been trying to edit my blog setting words and it is not letting me so stuff is definitely wonky right now.
It's not possible, sorry. Tried that a year ago but it's one of many bugs the developers on this site haven't fixed. Try writing them and perhaps you can goad them into doing some badly needed minimal maintenance here.