Masking to Make Icon Blends Come to Life: Photoshop
I'll be showing y'all how to use layer masks in Photoshop so you can create neat icons in a flash.
We're going from this
to this 
NOTE: This tutorial is long and pretty image heavy, even though the icon only has 7 layers. The reason is I'll be taking extra time to demonstrate layer masking step by step, and then showing the mask for each layer. If you already know how to mask, you know how to make this icon. If you don't, this is the tutorial for you (assuming I don't screw it up and confuse everybody). If you're using dial up, I'm sorry. This will take a long time to load. Plus, y'know, I'm wordy.
Layer 1
I've already prepared the base. Basically, I took an image capped by
mizugazipan from Magna Carta, cropped it, pasted it into a new image (Ctrl+N) and then sharpened it. For sharpening, I like to use the Unsharp filter, because you have a little more control than simply selecting Sharpen.
Filter >> Sharpen >> Unsharp Mask. Click here for settings.
Layer 2
Here is the first instance where we'll be doing some layer masking. Before we do, though, we need a texture to blend. I chose one by
inxsomniax. Take this texture (or whatever one you choose) and paste it into a new layer, Layer 2.
I then took the texture and flipped it horizontally, because I wanted the red bar to cover all that nasty white space. Edit >> Transform >> Flip Horizontal.

Set layer 2 to Multiply.

Now, this is where masking comes in. Masking is basically erasing, except on a masked layer you use a paintbrush instead of the eraser tool (thus you can undo any mistakes you make by re-painting, not pressing Ctrl+Z constantly).
Look down at your Layers Window. At the very bottom you'll find a rectangle with a circle in the center of it. With layer 2 selected, click this button.

Now, look again to your layers. Layer 2 should have changed.
From this:
To this:
That white box is your nifty, brand-new mask.
Not only has your layer changed, but if you look at your tool box, you'll find that your colors have changed to black and white. Don't panic! Your image hasn't gone grayscale. These are simply the two colors that 'control' the mask. In other words, think of the color white as the texture itself. Since the mask is currently all white you can still see all the texture. Black is the 'eraser' color, so if you flip black to the front and begin painting on your texture, instead of seeing great globs of black you'll see the texture disappearing underneath your paintbrush.
Now, you could do the same with the eraser tool, but what you can't do is simply flip your foreground color back to white, and re-paint in the texture as if it never disappeared. This is the miraculous world of masking. Learn to love it, because it will love you.
For this icon, I used my icon-masking brushes. You can download the .abr file or the image pack here. If you're looking for bigger brushes for large blends, try Tere's smoke set. Anyhoo, basically I made sure to paint over her head, body, and part of her hair. I also used a normal 3px brush for the sword and the strap.
Here's the mask for layer 2:
You wont see the mask except in the layer window
Instead you'll see the result:
Layer 3

Another texture and more masking. This time I used a light texture I made from a stock photo. Paste this texture onto a new layer (Layer 3) and set this layer to Screen. Again, with layer 3 selected- click on the masking button, make sure your foreground color is black, and start painting.

Layer 4
Time for some brushes (other than masking brushes). Ctrl+Shift+N for a new layer (layer 4). I used my transparency brush set (brush 1 at #D67BA4) to give the icon a neat little 'erased in photoshop' effect.

I didn't want the brush to overwhelm the image, so I (again) made a masking layer and started painting over all but the white flare and a few bits here and there.

Layer 4 copy:
Because the brush was a little hard to see, I copied that layer to 'darken' the effect a bit. Right-click on Layer 4 and select Duplicate Layer. Notice your mask is copied too! :D Continue to tweak the mask a bit (because the bit under her chin shouldn't get too dark, and the fading effect on the flare is nice).


Layer 5

Ctrl+Shift+N for a new layer (layer 5) and, using your fill tool (bucket), fill the layer in with #A0AFB8. Set this layer to Soft Light to highlight the image a bit. Now, I only wanted her head and the corner highlighted, so I created another mask for this layer and painted the rest of the blue away.

Layer 6
No more masking! Time instead for the text to be added. You can see my text settings here (color is white).

Layer 7
Click here for text settings (color: #7D605E). I also applied a Drop Shadow (right-click on layer and select Blending Options)... only I made the shadow white, set it to normal, and made the size slimmer. Click here for Drop Shadow settings. Finally, I set the layer's Fill (look just under Opacity) to 85%.
And that's it! Now you know how to use layer masks! Have fun :)

We're going from this
NOTE: This tutorial is long and pretty image heavy, even though the icon only has 7 layers. The reason is I'll be taking extra time to demonstrate layer masking step by step, and then showing the mask for each layer. If you already know how to mask, you know how to make this icon. If you don't, this is the tutorial for you (assuming I don't screw it up and confuse everybody). If you're using dial up, I'm sorry. This will take a long time to load. Plus, y'know, I'm wordy.
Layer 1
mizugazipan from Magna Carta, cropped it, pasted it into a new image (Ctrl+N) and then sharpened it. For sharpening, I like to use the Unsharp filter, because you have a little more control than simply selecting Sharpen.Filter >> Sharpen >> Unsharp Mask. Click here for settings.
Layer 2
Here is the first instance where we'll be doing some layer masking. Before we do, though, we need a texture to blend. I chose one by
I then took the texture and flipped it horizontally, because I wanted the red bar to cover all that nasty white space. Edit >> Transform >> Flip Horizontal.
Set layer 2 to Multiply.
Now, this is where masking comes in. Masking is basically erasing, except on a masked layer you use a paintbrush instead of the eraser tool (thus you can undo any mistakes you make by re-painting, not pressing Ctrl+Z constantly).
Look down at your Layers Window. At the very bottom you'll find a rectangle with a circle in the center of it. With layer 2 selected, click this button.
Now, look again to your layers. Layer 2 should have changed.
From this:
To this:
Now, you could do the same with the eraser tool, but what you can't do is simply flip your foreground color back to white, and re-paint in the texture as if it never disappeared. This is the miraculous world of masking. Learn to love it, because it will love you.
For this icon, I used my icon-masking brushes. You can download the .abr file or the image pack here. If you're looking for bigger brushes for large blends, try Tere's smoke set. Anyhoo, basically I made sure to paint over her head, body, and part of her hair. I also used a normal 3px brush for the sword and the strap.
Here's the mask for layer 2:
You wont see the mask except in the layer window
Instead you'll see the result:
Layer 3
Another texture and more masking. This time I used a light texture I made from a stock photo. Paste this texture onto a new layer (Layer 3) and set this layer to Screen. Again, with layer 3 selected- click on the masking button, make sure your foreground color is black, and start painting.
Layer 4
Time for some brushes (other than masking brushes). Ctrl+Shift+N for a new layer (layer 4). I used my transparency brush set (brush 1 at #D67BA4) to give the icon a neat little 'erased in photoshop' effect.
I didn't want the brush to overwhelm the image, so I (again) made a masking layer and started painting over all but the white flare and a few bits here and there.
Layer 4 copy:
Because the brush was a little hard to see, I copied that layer to 'darken' the effect a bit. Right-click on Layer 4 and select Duplicate Layer. Notice your mask is copied too! :D Continue to tweak the mask a bit (because the bit under her chin shouldn't get too dark, and the fading effect on the flare is nice).
Layer 5
Ctrl+Shift+N for a new layer (layer 5) and, using your fill tool (bucket), fill the layer in with #A0AFB8. Set this layer to Soft Light to highlight the image a bit. Now, I only wanted her head and the corner highlighted, so I created another mask for this layer and painted the rest of the blue away.
Layer 6
Layer 7
And that's it! Now you know how to use layer masks! Have fun :)