The best way we can explain this process is handled directly in the IconBuilder Tutorial PDF that comes with the filter. We highly recommend that you read through both this document AND the IconBuilder User’s Guide to get a solid understanding of all the filter has to offer, including Open / Drop states in Mac OS X.
You can download and test drive IconBuilder free of charge so there is nothing to lose.
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.