I just came across this handy website for making favicons.
http://antifavicon.com/
favicon generator
here is a sample:
What is a favicon?
Favicon (pronounced fav-eye-con) is short for 'Favorites Icon.' A Favicon is a multi-resolution image included on nearly all professional developed sites. Within Internet Explorer the Favicon is displayed on the Address line and in the Favorites menu. The Favicon allows the webmaster to further promote their site, and to create a more customized appearance within a visitor's browser. Often, the Favicon reflects the look and feel of the web site or the organization's logo.
http://msdn.microsof...hortcutIcon.asp
Create the Correct Size Icon
For Internet Explorer 5, the required size of a shortcut icon is 16x16 pixels. To create the icon, use an icon editor, such as the one included in Microsoft Visual Studio or one of the many other icon editors available. Regardless of the program you use, make sure you set the editor to create an icon that is 16x16 pixels. Otherwise, the icon will be ignored by Internet Explorer.
Associate the Icon with Your Web Page
After creating the icon, you must associate it with your Web page. One way is to save the icon with the default file name of favicon.ico in the root directory of your domain—for example, www.microsoft.com/favicon.ico. Each time your Web page is added to a user's favorites, Internet Explorer automatically searches for this file and places the icon next to all the favorites and quick links originating from your site.
You can also associate the icon with your Web page by saving the icon with a file name other than favicon.ico and adding a line of HTML code in the head section of your Web document. The line of code includes a link tag that specifies the location and name of the file. You can include this link tag on a per-page basis.
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