Attached a brief instruction for menu manipulations with complete example from my n900 (Attached zip file).

Small update:
If you have plans to use custom icons for any application then you have to execute as root gtk-update-icon-cache -f /usr/share/icons/hicolor as suggested here "Personal Menu tips and tricks" to rebuild the cache after you did copy the icon on the device. In my case it was required also to restart n900 after cache rebuilding to get icons on the place.

Useful link: Desktop file (*.desktop) format