This is how to make a cursor with photoshop.
I will be making my cell phone as a cursor.
Step 1: Open Explorer
First download the attached plugin and put it in the directory C:\Program Files\Adobe\Adobe Photoshop CS2\Plug-Ins\File Formats.
Step 2: Open Photoshop
Open Photoshop and create a new file, 32x32 and give it a solid color background---(it wont show up later)
Step 3: Make Cursor
Make what you want your cursor to look like.
Then use the magic wand tool and select the background color.
Step 4: Now Add It to an Alpha Channel
Now we are going to add it to an alpha channel by pressing Select--->Save Selection...
Then we name it like BG or something.
Then Deselect (Ctrl+D)
Step 5: Now Save
Go File--->Save as...---> Type name and use scrollbox to select *.cur
Step 6: Apply Cursor
Go to control panel ---> Mouse ---> Pointer ---> Browse
Then find your cursor and press ok
Step 7: DONE!!!
Now we are done.