For advanced-level/confident users. Tutorial covers PSP 7, PSP 8 and Photoshop Elements 5.0.
Edit: GIMP version now up here.
PART I: THE CUSTOM FILTER
The bad news is this tutorial requires the use of a custom filter, which means typing in a big block of numbers. The good news is you only have to do it once, and then you can save the filter effect and reload it any time you need it.
First, open an image. (Any image, it doesn't really matter at this stage - you just need one open so you can access the right menu options.) Then open the Custom Filter Dialog:
PSP 7: Select Effects > User Defined from the menu, and click the New button.
PSP 8: Select Effects > User Defined from the menu.
Elements: Select Filter > Other > Custom from the menu.
This is the dialog that comes up in PSP 7. If you're using one of the other programs it'll be fairly similar, although the PSP 8 version has a few more bells and whistles.
Aaiee, scary! But don't panic. You don't have to know what it means, just fill in the numbers. For PSP 7 and PSP 8, use this pattern of numbers:
Set the Divisor/Division Factor to 1 and the Bias to 0. PSP 8 users, you have additional options, so make sure that 'Colour Channels' is selected rather than 'Grey Values' and that all three colour boxes are checked.
Elements users, you only have a five by five grid, so you'll have to use a slightly different version:
Set the Scale to 1 and the Offset to 0.
Okay? Now, breathe. That's the scary numerical stuff dealt with. Now you just need to save the filter:
PSP 7: Type "Scribble" into the name box at the top, and click OK.
PSP 8: Click the little blue disk at the top, type in "Scribble" as the name, and click OK.
Elements: Click the Save button. Name the file "Scribble.acf". Stick it in a folder somewhere and don't forget where you put it.
The custom filter is now saved, so close the dialog. Now, on to the tutorial!
PART II: THE ICON EFFECT
0: Choose a Base
This is actually the hardest part. Using this effect is kind of a crapshoot; some images it works really well, others it just looks horrible. I've tried it on a ton of different screencaps and I still find it hard to predict when they'll work and when they won't, so all I can give is vague advice.
As a general rule, you want to go for contrasting colours, well framed faces and fairly flat lighting. (Dark-haired people with dark clothes against a coloured backdrop? Good. Pale-faced blondes in winter landscapes? Not so good.) Blurry images, busy backgrounds and strong patterns of light and shade can often mess the effect up. But then again, sometimes they look cool. It really is mostly a case of try it and see.
Once you've picked out your base image, crop it to a square but don't resize it yet - you want it as big as possible. (The image shown below is half-size; the original I'm working with is about 500 by 500 pixels. The full size version is here, for those who want to play along at home.)
1: Run the Custom Filter
PSP 7: Select Effects > User Defined from the menu. Highlight "Scribble" in the listbox. Make sure that 'Colour Components' is selected rather than 'Grey Values' and that all three colour boxes are checked. Then click Apply.
PSP 8: Select Effects > User Defined from the menu. Select "Scribble" from the Presets drop-down menu at the top. Click OK.
Elements: Select Filter > Other > Custom from the menu. Click the Load button, navigate to the folder where you stashed "Scribble.acf", and load it. Click OK.
Your image should now look something like this:
That's quite an interesting look just on its own, but it's very messy at icon size, so I prefer to remove some of the noise.
2: Reduce Noise
PSP 7: From the menu, choose Effects > Noise > Salt and Pepper Filter. Set Speck Size to 7 and Sensitivity to 4. Make sure 'Include All Lower Speck Sizes' is checked and 'Aggressive Action' is switched off. Click OK to apply the filter.
PSP 8: It's the same filter and settings as in PSP 7, but you'll find it under Adjust > Add/Remove Noise > Salt and Pepper Filter.
Elements: Select Filter > Noise > Dust & Scratches from the menu. Set Radius to 1 and Threshold to 5. Click OK to apply the filter.
And now the dots have blurred a little into a scribbly effect. Cool, huh?
3: Finishing Up
It's now okay to shrink the image down to icon size.
You're basically done, but I usually add two more steps to make the colours a bit stronger:
3a. Duplicate the base layer and set the mode to multiply.
3b. Add a low-opacity soft light layer filled with blue or purple to remove a bit of the yellow/orange cast. The final result looks like this:
And finally, remember to save it as a GIF - this effect looks fine in GIF, and it'll be a much smaller file than PNG or JPG format.
A Few More Examples
If anybody actually succeeds in getting this to work, I'd love to see what you come up with!