Your icon file should be added to one of your project assemblies and its Build Action should be set to Resource. After adding a reference to the assembly, you can create a NotifyIcon like this:
System.Windows.Forms.NotifyIcon icon = new System.Windows.Forms.NotifyIcon();
Stream iconStream = Application.GetResourceStream( new Uri( "pack://application:,,,/YourReferencedAssembly;component/YourPossibleSubFolder/YourResourceFile.ico" )).Stream;
icon.Icon = new System.Drawing.Icon( iconStream );
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