Before I start, I am hoping that you A) have downloaded Icecast 2 and B) have some software installed that is compatible with Icecast 2 (Like SAMBroadcaster, etc..).
Right, first extract the icecast download and put it somewhere easy to navigate to (I put mine on the root of my C drive). Now navigate to "/icecast/etc/"
There will be a file in there called "icecast.xml". Open that with Notepad and scroll down just a tiny bit and you'll see an "<authentication>" section. You will need to change the passwords here (default: hackme) that I've highlighted, change them to something that'll be secure - unlike how I've got mine currently set for this tutorial.
Once they're done, you will then need to go down the document just a tiny bit more and find "<hostname>". This MUST be replaced with your OUTSIDE IP Address. Using "localhost" or "127.0.0.1" will only work on your local network (i.e; any computer connected to the same internet connection/router as you in your house). Unsure of your IP Address? Click here to find it out.
That's all that's needed for Icecast's settings. It's all set up and ready to rock! So head up a folder (to "/icecast/") and double-click the "icecast.bat" file and you should see a DOS-style window open looking like this:
Keep that window open! :)
For this tutorial, I'm using SAMBroadcaster. You can get a 30-day trial from their website, you should try it. It's amazing! Cross-fading, queues, loads of fiddly options, I could go on for hours over the amount of features but I haven't really got that much time - oh and there's a sound effect that's of a cow on there too... it goes MOOOOOOOOOO MOo when you press it. (Simple things please simple minds, eh?)
Right, with SAMBroadcaster open (I'm guessing you've got the default layout settings), so head to Desktop "B" and you'll see a window titled "Encoders". Click on the "+" button.
In the window that comes up, the best option I find to use is "Ogg (vorbis)" (high quality at a low bitrate). Now don't worry about the first screen that pops up, head to the "Server Details" tab and replace "Server IP" with your OUTSIDE IP (like earlier), leave the "Server Port" at 8000 (it's an alright port to use) and then change the "Password" to whatever you put in the "<source-password>" section in the "icecast.xml" file. Fill out your station details, if you really need to, and once done, hit "OK". You'll now have an encoder in the "Encoders" section.
Now highlight the Encoder and click on the "PLAY" symbol button and you should see the status change to "Encoding".
That's SAMBroadcaster setup and running too!
*TIP* Try and find music to have playing whilst doing this as the encoders sometimes time out if nothing's playing.
SO WHAT NEXT?
Now you have the streamer and the music working, you'll want to listen to the feed yeah? Well just head to http://localhost:8000 and click on "Administration" and login using the admin login details given in the "icecast.xml" file.
And that's all it is. :)