So, I just installed octopress and published a hello world post, but the smilies(emoticons) didn't converted to icons

No Worry, i asked uncle G and now writing down the procedure in case i forgot it in future

Installation:

The smilify plugin is here jekyll_smilify

git clone git://github.com/SaswatPadhi/jekyll_smilify.git

Assuming we cloned octopress to ~/octopress and jekyll_smilify to ~/jekyll_smilify

cd jekyll_smilify/
cp plugins/smilify.rb ~/octopress/plugins/
cp -r source/images/smileys ~/octopress/source/images/
cp -r source/_include/smileys/ ~/octopress/source/_includes/smileys/

Placing things in write place is done. Now need to enable the contents to filter through Smilify.

Activation:

Open ~/octopress/source/_layouts/default.html and replace

{{ content | expand_urls: root_url }}

with

{{ content | expand_urls: root_url | smilify }}

Then, open ~/octopress/source/_layouts/page.html and replace

{{ content }}

with

{{ content | smilify }}

Optional:

I see the css of the octopress theme was making the smiles to have a border around it and drop-shadow applied, which looks ugly. To fix this,

Open ~/octopresssass/custom/_styles.scss and add

img.smiley { border : none ; box-shadow: 0 0 0 0 }

All Done

NB: We need to active the plugin again after installing a new theme.