Have a read at this article http://helpdeskgeek.com/how-to/customize-folder-icons-desktop-ini/
IconFile
If you want to specify a custom icon
for the folder, set this entry to the
icon’s file name. The .ico file
extension is preferred, but it is also
possible to specify .bmp files, or
.exe and .dll files that contain
icons. If you use a relative path, the
icon is available to people who view
the folder over the network. You must
also set the Icon Index entry.
In over words you will have to specify a relative path to your icon
eg ./hiddenfolder/mycoolicon.ico
Good Luck