HFS CUSTOM VOLUME/FOLDER ICONS

To give an HFS CD a custom icon, make sure the root (top level) folder includes a standard Macintosh volume icon file. To give a volume a custom icon on a Macintosh, an icon has to be pasted over the volume's icon in the “Get Info” box of the volume. This creates an invisible file called 'Icon\r' ('\r' is the “carriage return” character) in the root folder.

A custom folder icon is very similar - an invisible file called 'Icon\r' exits in the folder itself.