the PNG favicon you uploaded is linked correctly and is displayed correctly, at least in Chrome.
Did you take a look at the description on the Wikipedia page (especially the compatibility chart) or this blog entry if you are using Internet Explorer?
For example, Internet Explorer does not display PNG favicons.
Also, if you ever visited your own site before and had a different favicon or no favicon at all, your browser probably cached that. Try deleting the cache, or use a different browser to test if the favicon is displayed.