This isn't a design problem, so much as it is a technical one: I am running Vista, and the Chaoscope icon is too small and becomes stretched and ugly when placed on the desktop, so I recreated it in Inkscape. I downloaded and installed a plugin for Photoshop CS2 that lets it save as an ICO since Inkscape can't save as ICO. The problem is that the Chaoscope logo itself has transparency on both sides, and when I export it as a PNG and then use Photoshop to save it as an ICO, the icon becomes stretched horizontally when I try to use the icon on Vista's desktop. I know the design of the logo is not flawed; when I open the ICO in photoshop, it retains its dimensions properly. I've never done icon design before, so maybe I just don't know that icons always have to occupy a perfect square. I dunno. Or maybe my plugin doesn't give me enough options when I try to save as an ICO. Anyways, does anyone know how to work around this? Any help is greatly appreciated.

Your best bet is to approach the developer of the plugin--if the image displays fine in Photoshop then it's not a problem with Inkscape.

Having said that, if I was to take a guess, I would say the problem is that the size of image you have created is not the same ratio as your icon. Icons are square and if your image is rectangle the plugin may be stretching the image to fill the remaining area. So you may need to resize the canvas to make it a square.

Finally, there are a few free stand-alone applications on the web that can convert a PNG to an ICO. You might like to give one of those a try since your Photoshop plugin seems a bit picky.

.ico files usually carry more than one version of the icon, each a different size. Try exporting from Inkscape in different sizes (search to find the default sizes) and import them all into Photoshop, and save as .ico with different sizes as different layers.