This is for Photoshop CS, but I imagine that lower versions would be able to use it as well. I have never used PSP so I don't how well this would translate.
The icon being made:
I'll be using this image in this tutorial, if you want to follow along with the same image.
After you open your picture, change the mode to Grayscale (Image>Mode>Grayscale). Then change it to Duotone (Image>Mode>Duotone). Change the settings in the option window to the following:
Now, you have to set the curves. To do so click on the box to the left of the color.
Set the Black to this:
The Yellow to this:
And the Blue to this:
Change the mode to RGB. You hopefully should have something like this:
Next step! Cropping!
Select the Crop tool and change the settings like so (No, the text will not be weird. Trust me on this.):
Now, most of the time I have to crop the image a couple of different ways before I'm satisfied, but this time I liked the first one. So, the cropped image:
Duplicate the layer and sharpen it (Filter>Sharpen>Unsharp Mask).
Duplicate the sharpened layer twice. Select the first duplicated layer and up the contrast to about 40% (Image>Adjustments>Brightness & Contrast). Set the layer mode to Screen. Then select the second duplicate layer (the top-most layer) and desaturate it (Image>Adjustments>Desaturate). Set the layer mode to Soft Light. If your image seems too bright lower the opacity on the Screen layer.
Create a new layer (Shift+Ctrl+N) between the Screen and the Soft Light layers. Fill it with #F3D407 and set the layer mode to Hard Light.
Make new layer on top of the Yellow layer and fill it with #2C0E8F, then set the layer mode to Soft Light.
Make another new layer, over the Yellow and Blue layers and fill it with #7B2217, and again set the layer mode to Soft Light.
Make ANOTHER new layer, this time between the Yellow and Blue layers. Change your foreground color to white (#FFFFFF), then use this brush by cosmo_mouse (or really, any frame-type brush):
Leave the layer mode at Normal, or change it to Soft Light if you want a softer look.
Next, select the area outside the brush with the Magic Wand or Lasso tools. Starting with the original sharpened layer, Motion Blur (Filter>Blur>Motion Blur) each image layer. You can use any strength and angle you so desire. Deselect.
Rotate the canvas 90 Counter Clockwise (Image>Rotate Canvas>90 CCW).
Add text. I used "Say hello", which is what my mind came up with when I asked myself what the text should be. I don't know what it means.
Rotate the canvas back (Image>Rotate Canvas>90 CW). Take a deep breath...Aaaand you're done.
For the sake of comparison, here's the original icon and the one I made using this tutorial.
And for no reason at all, here are some other icons I made using the same technique.