I am trying to average time. The time format in the cells are 0:00:00. I have changed the number section at the top to time however I keep getting 00:00:00 as the answer.
I think you might be doing some thing wrong.
Refer to the screenshot of my samples with the formulas.
It is likely that Excel does not recognize your times as times. To test change the number format of your time entries to "Number". This should cause your time values to change to a decimal number. If they still appear to be time values, Excel likely understands them as text values.