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It's up to you! Whatever game engine you are most comfortable with is a fine choice!

I'm personally a fan of GameMaker: Studio. It's a pretty powerful engine for quick and dirty prototyping!

I'll probably be using Fusion 2.5 then

Alrighty! Have fun! :D

can I make a game with pixel art graphics drawn with ms paint?

Sure! As long as you use paint or a paint like program, any art style is fine! :D