I've looked at the Vals Icons V2.4 thats on the CD website this morning.
I downloaded and unzipped directly into resources_override into an unmodded copy of the game.
Logged in a dragon and I could see the replacement icons.
This was on an XP system.
I can't see anything wrong with the archive or the description on CD so I'm thinking its either a clash with something or maybe a vista/win7 permission issue (like with the map pack).
As for changing a command line. You don't need to alter any files, unless the path specified to resources_override has been changed. However as a default setting the game points to resources_override.