If it really is a problem with displaying the picture I don't think I can be much of a help, but I do know from my own experience that it can be really hard to see it. It might be hard to see that it is not just any icon, but it can be found among the other icons, such as "Send file" etc. That is in the chat window, I don't know if the pictures can be displayed in the list of contacts if that is what you are looking for. Don't even know if that is possible, but if you hold your mouse over the names of your contacts you should be able to see the image there. :-/
Don't know if this was of any help, but I guess it's better to check one more time before giving up
I also noticed there is a thread dealing with Kopete and Yahoo! (
[KOPETE] Readme: Yahoo!) perhaps you can find more help there :-/