Here is the Easiest Tip to Just Drawing/Tracing a Dotted Line in Photoshop CS…
The Easiest Way to Draw a Dotted Line in Photoshop is to Use the Pencil Tool.
After you Choose the Pencil Tool you go in:
Window > Brush
and then you Modify the Spacing parameter something like below:
How to Save Image as ICO on Photoshop CS for Mac and Windows:
How to Save As ICO on Photoshop