Is saying "pretty ugly" an oxymoron?

No it isn't, seeing as 'pretty' in this sense is not as in 'good looking' but means more like 'quite'.

Nope. Pretty as an adjective has a meaning synonymous with "beautiful," but pretty as an adverb modifies an adjective like "ugly." Other synonymous adverbs are "really." As in "really ugly."

Above average

not in this sentence because pretty is not referring to beauty, but referring to 'how much' or 'how ugly'...its a different meaning to the word

Yes because they are two words that mean opposite things in the same sentence. This is an oxymoron.

No its not because pretty is referring to how ugly not beauty.

in that context, "pretty" is not meant to imply beauty, it is meant to imply an amount or a degree of something .. in this case, it means "very" ugly

Yes, it is!

Here's something for your class to debate over:

Someone says, "How are you?" You answer, "good."

They assume you are good.

Someone says "How are you?" You answer, "pretty good."

They assume something is wrong.

Why are 2 positives, pretty and good, worse than one positive, just good?

Ha Ha Ha Ha. It sounds like a good one to me.

no people use pretty to show like levels

like "that test was pretty hard"

no that test was pretty