Picturebox doesn't stretch images unless you use PaintPicture method so if you set Autosize = True then control will be resized to fit image.
On the other hand, if you are using Image control (note: not Picturebox) then make sure Stretch propety is False.
I uploaded a test project. Look at the icon in explorer and you will see it is not stretched. Then open vb and run the project. The icon appears stretched.
I am not using PaintPicture and it is not an image control.
The problem is that your icon is 48x48 pixels, which is a format that VB does not understand - it only supports 16x16 and 32x32, with up to 24-bit colour (so no alpha channel).
I've attached an updated version of the icon, which includes the original and the two other sizes. Your program will show the 32x32 version in the picturebox, and (if you add code for it or set the properties) will show the 16x16 version for the form icon.
You just need a decent icon editing program, there are many available.
A popular (and very good) one is MicroAngelo, but that costs money. There are many free ones available, and it is possible to find high quality ones for free - such as my personal preference, IcoFX. You can find these two (and many more) by doing a web search for "Icon editor".
In IcoFx you can add a new icon to the file by clicking the "Insert New Image" button, then select the size/colors for the new icon (by default it copies the icon you've got selected at the time, automatically adjusting the colors/size as apt). Other decent icon editors offer similar functionality, just via a different button/menu.