1) I find a digital copy of the character I want to do online somewhere. There are quite a few websites that post "ripped sprites" from video games, so there's a lot to choose from. Couple of the sites I find them from are Game Sprite Archive and NES SNES Sprites.
3) Once the image is converted to the PixelBlocks colors, I zoom in on the image in Photoshop and turn the grid on. The makes it easier to build the larger ones, because I can then count the number of blocks I'll need when putting it together. I take a screenshot of the zoomed image, although I suppose I could also simply increase the image size in Photoshop. The zoom is quick and easy to do. I save both a copy of the screenshot and the converted sprite for future use if I want to make one again.
5) Once the 2D sprite is built, I make a base so it can stand up at my desk and snap a picture of it. Its better to take a pic of it standing up, because some of the blocks are darker and its better with light shining through them to better define the colors. Otherwise they look like black.