I'm still learning the ropes in texturing in Blender quite heavily, but I'm currently trying to paint a sculpty to go with avatar mesh stuff, so here are some notes to remind myself how to not be frustrated for 3 hours trying to figure out why my view is on crack.
First step is to download the av meshes- SL's website has that downlaod section with the obj files, and I think I have 7 other copies from other sources (q/avimator might have them in formats that help, the clothing previewer, who knows what else). I do basically everything on the female mesh. One part because I am one, and one part because I find the "default" male mesh doesn't wrap quite right (of course, the one in SL is somewhat of an annoying mess, I think, as well- just in slightly different ways).
Next is to import- go to Blender's importer list and snag the Wavefront OBJ Importer/Exporter, drop that file in your Program Files\Blender Foundation\Blender\.blender\scripts directory.
Fire up Blender and choose File->Import->Wavefront .obj, and a file menu will appear at the bottom. Navigate through the amazingly clunky DOS like interface to find your file, and import it- but don't move your cursor from the button! This popup happens with all sorts of options which you mostly want to ignore, and just hit ok. However, if you move your cursor it disappears and your file does not import, and you're standing there going "well, crap. I thought that was supposed to work" for a month or two.
The avatar imports really small, so zoom in to see it. It's also all detached bits, select all the ones that map together with shift, and hit crtl-J to join them into one (everything will be UV mapped properly). I haven't tried it because I just figured this all out tonight, but I'll bet you can connect the top of the lower body and the bottom of the upper, and be able to paint across those dastardly seams!
When trying to paint a sculpt with the av mesh around for reference, still in Object mode select the avatar first, then shift select the sculpt so it's last selected. This way you won't get the sculpt making the avatar invisible walls (try switching to UV Face Select just with the sculpt selected, and you will probably see what I mean. It drove me nuts for a bit until I found out how to make it not happen. EDIT: Or even with it your view may decide to be on crack with a new file for NO APPARENT REASON even when you do do this, so...yeah, I've got to find a new way to trick it into behaving). To put an existing texture on the avatar mesh (or anything else), select it in Object mode, select all in UV Face Select mode, and then import your image. You can paint directly on that in Texture Paint mode, as well.