Under "Music" in iTunes make sure the Ringtones sort column is visible (Right+click sort bar > select Ringtones). Click the ringtone column to sort by ringtone and your music will be divided into songs that can be converted into ringtones and songs that cannot. Only songs purchased at the iTunes store can be converted into ringtones- if that artist's record label has agreed. To make a ringtone select the song you want and click the bell icon in the ringtone column. A mixer interface will appear at the bottom of iTunes and let you choose up to 30 seconds of the song to loop as a ringtone. When you're done, just click the "buy" button.