Tools of the trade:
1. Any graphic software to create your icon.
2. A site you can upload the images -Photobucket is a good one
3. Of course a blogger website
Prepare one image around with sizes of either 16x16, 32x32. Try not to go beyond 100x100 pixel as it might distord the pics.
Save the image type as either ico / png / jpeg.
Then upload icon image to photobucket.
Thirdly copy the below link, (replace the image url with your image url)
<link href='http://www.photobucket.com/yourimage.jpg' rel='shortcut icon'/>
In the Layout tab, choose "Edit HTML"
Place the code in your blogger Edit HTML blog between
Click SAVE and you're LIVE!