I've created my custom context menu item, and it seems to work on all file types - even through shortcut links. (Selecting my custom option performs the operation on the shortcut target, not the .lnk file.) Now, I'd like to create an icon to make it stand out. My antivirus program and Notepad++ seem to have been able to do this, so I know it's possible. The only question is, how?
Open regedit.exe and find the key that you created for the custom menu item.
Now create a new String value in it and name it
Optionally you could use the Windows shell32.dll file like in my example:
Just an additional note - looks like this method works on Windows 7 (and probably Vista) but the icon did not appear when I tested on Windows XP.