-In iTunes, right click on the song you want and select Get Info
-Under options, specify the start and end time of the session of the song you want the ringtone to be
-Exit out Get Info and right click on the song again, this time select convert
-Find the converted file under iTunes folder. Rename the extension to .m4r
-Drag the file to iTunes, and sync with your phone
These are the steps on top of my head. There could be some errors but you get the idea.