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Originally Posted by sanddrag
Photoshop works well for making most graphics, but if you are looking to save a file in a specific format, you may need something else.
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Photoshop does NOT save in the .ico format. I'm not sure what saves in the mouse cursor format.
However, newer versions of windows let you set images (especially PNGs for their alpha layers) as icons, making them a decent standby until you can put them all together in a .ico file (Which can hold many icons).
I don't know of a program that makes them for free though.