This article is from the CD-Recordable FAQ, by Andy McFadden (firstname.lastname@example.org) with numerous contributions by others.
First off, you need to be aware that certain aspects of PhotoCD creation
are proprietary to Kodak. Programs like Roxio's Easy CD Creator will
allow you to create CD-ROMs with PhotoCD image files, and you will be able
to view the images with Mac or PC programs that understand the PhotoCD file
format, but you won't be able to look at the disc with a PhotoCD player.
See http://tedfelix.com/PhotoCD/ for an excellent discussion of the subject.
The Build-It and Arrange-It software, which allow you to create "real"
PhotoCDs, used to cost about US$450. Kodak apparently pulled the software
from the market in December 1997, making it difficult to find.
http://www.shiresoft.com/ gives you step-by-step instructions and software
for creating "real" PhotoCD discs with Kodak's software. The Build-It
program will only write to Kodak CD recorders, but a translator available
from this web site will allow it to work with programs such as CDRWIN.
Follow the Kodak links on that page.
There are some utilities that will convert images into PCD format, but they
only support the uncompressed base resolutions. The higher resolutions are
compressed with an algorithm proprietary to Kodak.