Message to the newbies: PLEASE read this before posting about an issue with the sprite in-game. If it looks different or transparent in odd places, it's probably not in palette and you need to use one of these methods in order to fix it. If requested, I'll try to add support for other software programs. Otherwise, I think I've covered the basics. Enjoy!

Paint.NET Method

Microsoft Paint Method
by TrouserDemon

Watch his video for the simple way to put sprites in palette using MSPaint.
http://uk.youtube.com/watch?v=peMhNAntfTA

Adobe Photoshop Method
by ....well no one in particular.
Download


Someone in the comments requested the Photoshop palette thing, so here it is. To use this, I advise that you start making the sprite in palette. I had a bad experience when I used this after making the sprite. Basically, all you need to do is open Photoshop, create the new document, Image->Mode->Indexed Color. If a box appears, hit ok or whatever. Then, go back into the menu, but instead of clicking indexed color, click Color Table. Click load and select the palette for either Scenes or other sprites. Create your sprite like the merry little camper you are and enjoy.

Bumped for relevance and to clean thread.

Bugs and problems should get PM'd to the OP. OP should PM staff if they need to update.