About image converting...

.NET Framework doesn't contain encoder for icon files, and will not contain it in the future, I suppose. Instead of saving an icon file, this line of yours saves PNG image (you can check this if you open the file in a binary editor - it starts with byte 0x89, and then ASCII "PNG", i.e. bytes 50, 4E, 47).

Real problem, as I see it, is why doesn't .NET Framework throw exception, like invalid operation or not implemented exception. Instead, it silently ignores ImageFormat.Icon and uses ImageFormat.Png.

New icons use PNG format below, but still I do not agree with this solution in .NET.