Here is a free application for making material shaders. It has a normal map function.
neotextureedit.sourceforge.net
Add a bitmap block, load your texture, then add a normal map block and wire them together.
How it works? Usually you use a grey scale image, non-color image. White is the mountains, or bumps, and black is the holes or valleys.
You have a color image so it will do it by luminance, The brighter, or closer to white colors will make the hills or bumps, and the dark, or colors near black will be the holes or valleys.
When I am making a 3d character, I use the normal maps to draw small details like scales or scars.
Normal maps can be used for making simple bump shaders, and complex parallax shaders with shadows 8)
It is a great thing to learn about. You will use it a lot in game making, especially if you use a 3D game engine.
EDIT:
Your favorite painting application may have a plugin or a filter for normal maps... give google a shot.
I know they exist for GIMP, Photoshop, DogWAffle, and Paint Shop Pro.