Paint Shop Pro v7
To make a good personalized pic for you horse, the first thing you need is a good, clear image of the right breed. To find one, you can use a search engine, like Google or Alltheweb If you can't find a good pic by using one search word, try another. In the tutorial called Finding good pics, you can get more tips about how to find pictures. Make sure you eighter use pictures that are not copyrighted or that you ask the photographer for permision to use it in you photomanipulation.
The next thing you need is a good program to make your pic in. Paint, provided by Microsoft, is not so suitable although you can use it to write your horse's name on it. To remove backgrounds, fade, and all that fancy stuff, you need a bit more high tech program. Personally I use Paint Shop Pro, v.7. On PSP's home page you can find a trial version. Check the tutorial Where to get psp for more information.
Then you have to get used to the application. It can be a bit tricky at the beginning, but you'll learn :) Use your imagination, you don't have to stick to my effects! And don't be afraid to play with psp - if you keep using the program, and test what the different effects does to your pic, you will come up with "new" effects.