Did you update / replace your .htaccess file with the version provided by Elgg 1.7.3? No idea what else could have gone wrong.
Here is a link to the script that updated the profile photos: http://trac.elgg.org/browser/elgg/branches/1.7/engine/lib/upgrades/2010071001.php
Instead of using the username as the name of the photo, it now uses the GUID of each user. This leads to better support for national characters in usernames.
The only reasons I can think for it now working are:
1. You never ran the upgrade script
2. Something really odd caused that particular upgrade to not run
3. There was a permissions issue on those files so that Elgg could not rename them
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