Its always been a mystery how Microsoft Icons are made. Whenever we try with out traditional icon creation tools, we usually end up in minimal color bitmap kind of Icons or we have to google download some ready made icons from internet.
I recently came across an article from Microsoft (Though it was an old article, I saw it just some days ago) that was talking about Windows XP style icon creation.
Creating Windows XP Icons
This article primarily talks about using Photoshop as an image processing tool for creation of icons. It walks us through the theories of icon creation concept, decision of icon size, color etc.
I found it so useful for creating icons of my own. So I thought of publishing it for others to refer.