It's very simple dear friends.
An icon is a small 32x32(pixels)image.
The file name extention is '.ico'
Example : word.ico, games.ico, mydocuments.ico, myphoto.ico
The 'Paint' software is more than enough to create an icon.
(Paint is free with Windows)
To convert your photo as an icon
Start -> Run -> mspaint
open -> (your photo)
image -> attributes -> pixels -> width 32 -> height 32
file -> save as -> myphoto.ico
That's all. Now your photo is ready as an icon.