The $FavIcon variable should be set to the URL of the file containing the picture. To conform to W3C standards it should also contain the file type.
Change the variable definition to
$FavIcon = 'http://example.com/myicon.png';
Although you should use
$FavIcon = 'http://example.com/myicon.png" type="image/png';
Note the placement of the double quotes.
The format for the image you have chosen must be 16x16 pixels or 32x32 pixels, using either 8-bit or 24-bit colors. The format of the image must be one of PNG (a W3C standard), GIF, or ICO.
See also  proposals with the W3C web standards organisation.