It could be ccorrupted if it is not uploaded properly, copied properly, could be many reasons. I suggest you take the image you want to use as a favicon(i am guessing, you have it in either 16x16 or 32x32).
If not and you have a bigger image you can resize your image using photoshop, If you are not familer with photoshop, i suggest you use: the online editor: http://apps.pixlr.com/editor/
its not that. The name used to be logo.ico. When i use yourdomain.com/logo.ico the icon appears as icon but not in the address bar as wanted. If i change the name to favicon the icon doesnt appear either on the yourdomain.com/favicon.ico or the address. It says that it is corrupt