This doesn't seem to be documented anywhere so here is a quick how-to.
First off open up the file you want as your avatar, it could be a dwg, skp, etc. Now publish this file to an nwd to the following folder C:\Program Files\Autodesk\NavisWorks Manage 2009\avatars\new folder name\new avatar name.nwd
Restart NavisWorks if it is open.
Open the file you want the avatar for, go to Viewpoint > Edit Current Viewpoint > Collision Detection > Setttings... > Enable Third Person, now from the Avatar drop down you can select your new avatar.
Under the viewer settings you can also change the size of the avatar by changing the height and the radius