The very long winded but it works method I used after scouring this forum is:-
Get the song I want as a ringtone as a mp3 (I import cd's using Windows Media Player as mp3 format, if I only have them on iTunes I burn a cd of them then re-import with Media Player.
Go to web site:-
http://audiko.net/
Upload the MP3, it then crops it to 30secs with fade in and out, save this to your desktop.
Import the cropped mpr to iTunes and then convert to AAC format (right click it in iTunes and select convert to AAC.
Find the file you converted in iTunes (search the music dir for .m4a) and rename .m4r and move to desktop so it is easy to find.
Transfer to your iphone by SSH or total commander, you need to find /var/Ringtones/ and put it in there
Once done you can select your song as the ringtone or alarm tone, works great but long winded as I said and requires the basic knowledge of using SSH or other file transfer program to put it on the iPhone.