Creating a character for Blender’s Game Engine is different from creating a character in Blender 3D. In Blender 3D, you have a wider range of options for creating detailed characters, such as adding geometry for details, using curves and surfaces, and sculpt mode. These high-polygon models work well for rendering. However, if such a model is placed in the Game Engine, the animation would slow down to an unacceptable level. Some commonly used techniques, such as subsurf, are not available in the BGE. BGE characters should be low-polygon for best performance.
However, they can’t be too low-poly, because the characters will look too much like rectangles and squares. In addition, you need enough geometry to do realistic animations in the BGE, such as walk cycles and lattice deformations. So creating a character for the Blender Game Engine is a tradeoff. In this tutorial, which is based on Tony Mullen’s discussion in Mastering Blender, a book I recommend if you want a great introduction to Blender in more depth, I show a recipe for creating a character for the BGE. It’s more a set of steps than a fully realized character. I leave that to you. I encourage you to use these steps to create your own character and post your result on my Blender 3D Forum at http://forum.irakrakow.com. I used Blender 2.49b.