5) Create a free account at IconJ - this site will convert your JPG, GIF or PNG to the ICO format and host the graphic for free.
6) Upload your JPG - just as you would upload photos to Flickr or Photobucket and save.
7) Click on "My Account" in IconJ
8) Under "Account Profile" click on "My Favicon Code"
9) Copy the code in the "My Dynamic Favicon Code:" box
10) Login to your blogger account
11) Click "Layout"; on the Layout tab, click "Edit HTML"
12) You will want to place the code that you copied from IconJ directly above the closing of your blogger header. You can quickly locate this by pressing Ctrl-F and typing "/head" into the search box (without the quotation marks). This will highlight the closing header code in your blog's html.
13) Paste the IconJ code into the html box directly above this line.
14) Save your Template
15) Open your blog in a new window, and your new Favicon should appear.