Half-Life: Alyx Workshop Tools/Modding/Source2mod/Setting a Steam Library icon
Copying the required files
Copy your .ico file into
Editing the gameinfo.gi
gameinfo.gi file. Change the icon keyvalue to the path of your icon relative to the gameinfo directory, without the file extension.
Run your mod with source2mod, and then restart Steam. Your mod should now successfully show up in the Steam Library with the custom icon.