Ok, these are the only instances where favicon shows up, and the files they are in:

includes/languages/english/winchester_black/meta_tags.php (this is the template I'm using)
Code:
Line #64 : // favicon setting 

Line #66 : // define('FAVICON','');
includes/templates/template_default/common/html_header.php
Code:
Line #34 : <?php if (defined('FAVICON')) { ?> 

Line #35 : <link rel="icon" href="<?php echo FAVICON; ?>" type="image/x-icon" /> 

Line #36 : <link rel="shortcut icon" href="<?php echo FAVICON; ?>" type="image/x-icon" /> 

Line #37 : <?php } //endif FAVICON ?>
includes/templates/winchester_black/common/html_header.php (this is the template I'm using)
Code:
Line #56 : <?php if (defined('FAVICON')) { ?> 

Line #57 : <link rel="icon" href="<?php echo FAVICON; ?>" type="image/x-icon" /> 

Line #58 : <link rel="shortcut icon" href="<?php echo FAVICON; ?>" type="image/x-icon" /> 

Line #59 : <?php } //endif FAVICON ?>