1. If you're using VS.NET, add a new icon to your project.
2. (You can open the icon editor by double-clicking the file in Solution Explorer)
3. Paste a bitmap from your clipboard.
4. Save.
I picked up Junior Icon Editor for free about a year ago and I really like it too.
Photoshop has a free plugin you can download to "Save As (*.ico)".
Works great and preserves transparency.
Doesn't support multiple icons per file however.
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