1.If you do not already have your new favicon.ico file you can create one at http://www.favicon.cc:
a. If you have an image file you want to use for the favorites icon, import your file and under "Preview" click "Download Favicon".
b. If you do not have an image and want to draw one, use the drawing tool on the www.favicon.cc.
2. Upload the favicon.ico file to your template directory. For example, if you are using the rhuk_milkyway template for your site, upload the favicon.ico file to templates/rhuk_milkyway.

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Christian Sweningsen makes this comment
Wednesday, 21 April 2010
I am puzzled. Doing the process at the favicon site, I get a very poor image, with even the colors changed, and very blocky/pixelated. Surprised, because it seems other favicons are not limited to the pixel blocks, I took a look at the site's own collection. Clearly many of the examples are not limited to the pixel blocks, but show more delineation. Any ideas?
Thanks.