The shorts need to be shaded like the rest of the sprite, but aside from that, I like it.

Heres a little spritesheet of luigi that I made in ssf2 style pretty crappy

I can totally see Mario there, which is bad.

A bunch of his sprites were edited from ssf2 and smas+w

near the death sprites it looks like the portal/gel looks like it was made with the brush.

Your first two sprites could easily be improved on. It's obvious you used the circle tool to make their heads. I would never use the circle tool to make the actual shape of the head. Think about it; do you know anything that has a perfectly circular head and still looks good? Unless it's Mickey Mouse, more than likely not. You should use those tools to help you form the shapes of your sprites though. For example, use the circle tool to get the basic shape of the head down, then go in and make changes to the outer lines to form a better looking shape. As for your shading, try to pick a direction for the light to come from, then base your shading around that. It will come out looking much smoother than random shading or pillow shading.
One more thing. If you're going to edit someone else's work, make sure you ask them for permission first and give them credit where credit is due. It's pretty obvious you didn't do that Luigi sheet from scratch.

it would look more like Luigi if he didn't have the M on his hat...
...just a tip though