Old style toolbars (circa Win95/Win2K) would typically use 256 color BMP files. All of the icons are put into a single file. Each of the icons would be aligned horizontally with the other icons—a toolbar with 10 32×32 icons would result in a BMP file that was 32 pixels high and 320 pixels wide.
In Windows XP, the BMP files can be 24-bit with alpha, per these instructions (scroll down to the Toolbar creation section.)
Despite what the article implies, GIF Movie Gear is not required to make 24-bit BMP files. You can create the files with Photoshop 7 or later:
There is also a trend to use 32-bit icons in the toolbar rather than BMP files. The advantage is that you can put the 24×24 pixel and 16×16 pixel sizes in one ICO file per toolbar element. This makes it much easier for the developer to add or remove items from their toolbar—they can add individual files rather than edit a single toolbar file.
The ICO files for the toolbar can be created with IconBuilder.
The style you use depends on what the developer is doing. If you are working with a client on this, they can tell you which type they need.
We've tried to anticipate most questions you might have. However, if you can't find the answer you're looking for here, send us your query and we'll answer it personally.