In order to properly rename an .M4A file extension to .M4R, go to the directory on your PC where the .M4A (AAC) file you just converted in iTunes is located and click (in the menu window at the top of the screen):
Tools > Folder Options > "View" Tab > Uncheck "Hide Extensions for known file types", then click OK to confirm.
Once you have unchecked this option, you will be able to see the actual .XXX extension of every file on your PC. Now you can click the file and change the .M4A extension to (.M4R). Once you have changed it and hit enter, it will ask if you are sure. Once you click "Yes" and the file is changed to XXXXX.M4R, the file icon will change to "RING" which indicates it is a ringtone file. Now you can open iTunes and copy it into the Ringtone directory of iTunes via copy/paste or drag/drop. Either method will work fine.