This was an interview question. Given Visual Studio 2008 and an icon saved as a .PNG file, they required the image as an embedded resource and to be used as the icon within
Go here:
http://www.getpaint.net/ (free)
And here:
Paint.NET ico Plugin (free)
Install Paint.NET. Put the ico plugin (second link) into the Paint.NET\FileTypes folder. Start up Paint.NET. Open your .png and save it as an .ico.
Free and easy.