1. You need Half-Life Logo Creator[gamebanana.com] (HLC for Short)

2. in HLC do this:
- Click on Options
- Check all the checkboxes and click ok
- Click on open and select the image you want as the spray
-Adjust the size of the image but keep in mind the number of pixels cannot exceed a total of 12,288
- Now check the checkbox on bottom that says "save it to"
- Select the path and name it "tempdecal" (tempdecal.wad)
- Now click on "make WAD" button
- Copy or move tempdecal.wad into the "valve" folder
- It will ask if you want to overwrite, click YES.

Note:
If you want it for Sven Coop, then put it into your svencoop folder.
If you want it for CS1.6, then put it into cstrike folder.
etc...
For scale, the screenshot below was resized to 96x96.

If you don't want a big square and want an appearance of a cutout,you will need to set your background color to Blue. GoldSource Engine sees it as a transparency color.

More specifically you need HTML color 0x0000FF