If you try to access the URL of your favicon.ico directly (http://example.com/favicon.ico) and your browser opens a “Save As” window instead of just displaying it, then your Apache isn’t set up to properly deliver the .ico file type.
Add this line to your httpd.conf file:
AddType image/x-icon .ico
Don’t forget to restart Apache to load the change.
If you test your favicon.ico after the change, but your browser still tries to download the file instead of displaying it, it could just be a browser cache issue. Add a ?1 variable to the end of the URL (http://example.com/favicon.ico?1) to make your browser see the file as a new resource. If you make another change and need to test again, simply change the number after the ? for each new test.