tough question to answer. Paint works, stain works, and a lot of people burn carvings with a torch for color as well. Oils, urethanes, and varnishes are also popular. Boiled linseed oil cut with a little mineral spirits is a common base coat, but some swear by sanding sealer instead. Spray paints are popular as well.
A lot of carvers consider the MS170 a little under-powered for carving, but you don't need a lot of power to carve, just to carve faster. Look into a quarter or dime tip carving bar, and 1/4 inch pitch chain (you also have to replace the sprocket) for doing finer detail work.
You might want to check the get the serial number off of your saw and check the stihl web site, there was a recall notice for ms170 and ms180 saws regarding a potential fuel leak. http://www.stihlusa.com/recall/recall_MS170_180C.html
Hope that gets you started.