Morning Mary,
Doesn't it sound like Michael has put the favicon icon in the wrong folder? which I suspect from his mail and from your "it is called from". Doesn't that mean something like: the browser will read it from this path?
But when you say "be called exactly that" aren't you talking about naming the file?
I hope I'm not being overly pedantic, esp at this time of year
I had wondered why Favicon sometimes worked and sometimes didn't - I did not know that it resided with themes. This leads me to suggest/request a Favicon field in the theme settings. Something like uploading profile pictures - and this would send it to the appropriate folder which normal users might not have access to.
In my own Moodle site, I can toy with the inner workings of Moodle, but the sites at uni I have no control over - and wouldn't expect it.
Happy new year
James