And no more than 30 seconds after I posted this I found the right spot. For anyone attempting this in 1.7 there are THREE locations that you must edit in order to get the favicon to show up.
Put the following code (as long as you place your favicon.ico in the support/images directory)
anywhere between the and
in all 3 of the following locations (for Windows IIS based installs)
support/include/staff/login.tpl
support/include/staff/header.inc
support/include/client/header.inc