Select the Magic Wand Tool, then highlight everything but the parts of the image you want to use.



Hit the Delete key...



... and voila. We now have our render. Now, it's not always that easy. Geno was nice enough to put that bold, white outline on them. In some cases, you may need to rip someone from a complicated background. Those take patience and skill to cut out. For now, we'll use an easy picture.

Now we're ready to screw around with design. Go ahead and create a new layer. Make sure it's under the Render Layer.



Next, head to DeviantArt and find a set of brushes that you think match the style of the artwork. Make sure to get permission before using them.

I found an excellent set of 8-bit brushes to use. I'll sort of be Geno's guide in video game land.

Now, use the brushes you've found to construct a nice background. This requires that you have creativity and placement skills. I cannot help you in any way with finding what works where. You need to figure that out on your own.

Here's my background.



You'll notice everything is black. I find it easier to start with a single color and work from there. Next, just highlight a certain layer and press CTRL+U. You'll be able to change the color of the entire layer or, in this case, each object.



There's the coin.



Continue coloring everything. Keep in mind the main colors you identified earlier. As you can see, I've chosen to use one of them in the black circles behind the characters. It acts as an anchor.



I've fixed the placement of certain objects, applied a white outer glow, and made sure all of the colors are consistent. We're almost done.

Drop Shadow. Here are the settings I use.