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The custom character folder has an example as well as two useful links within the text file in it for the creation of world sprites. 

The larger sprite to use as a base for it though is pretty much on you. 

To replicate the style of the dialog sprites in the game, please refer to this post:

I used Pony with "Smooth Style 2" at 0.8 weight mixed with "Watercolor Anime Style" at 0.3 weight, but extensive Img2Img of smaller sections of the base image is required to achieve the same style, since it'd be too coarse otherwise.
The base images were created using various other models and manual editing. 

Pony meaning Pony Diffusion V6 XL. For base images I recommend NovaFurry.