File's image well displays PNG icon not actual PNG
Copy paste the .png image onto the icon shown in the Inspector.
- Open the
.pngwith Preview - Select all with CMD+A
- Copy with CMD+C
- Select the application of which you want to change the icon.
- Press CMD+I to open the Inspector
- Click on the icon and paste the copied image using CMD+V
I have no clue why that works differently compared to dragging and dropping the image.
Also, the above worked for me, but only after I was still having some puzzling difficulties, so if that's you, on your desktop (make sure you are clicked on your desktop) go up to the top, to Finder - View - Show View Options
... and use the little slider to adjust the size of your icons, slide it back and forth, even back to where it started and I found for me that for some strange reason my icon just popped up. (I was trying to get a new transparent icon the image for a Hard Drive and all I was getting was a standard PNG graphic but when I used the slider, it changed to my new icon. Go figure.)