I can't remember auto dealing of the favicon was in v8 ... was it?

Anyhow, click on any object on your page [doesn't have to be the image] and press shift+ctrl+alt+a, then browse to the image you want and click ok. This adds the image - favicon.ico in this case - to the index_htm_files folder. Then, through web Properties, put this code - <link rel="SHORTCUT ICON" href="index_htm_files/favicon.ico"> into the head section of your page(s)