i build characters in several ways, simultaneously.
First, i try to identify a core characteristic for each of the main characters. this is a simple attribute, like loyalty or courage or tolerance or determination, that shapes in broadest outlines the way a character will behave. it also allows me to have the character make mistakes in a consistent way - too much courage and you are foolhardy, too much loyalty and you can get swept away into the thrall of a bad leader. so these traits are neither good nor bad, but they do give me a lense through which to begin to bring the character into focus.
Second, i define what the character WANTS, why he or she wants, and most importantly, what it will mean if the character doesn't succeed.
Third, i then give the character conflicts on three levels - internally; externally; and supernaturally - or to put it another way ... character against himself (as typified by hamlet)... character against character (war and peace) ... and character against Fate, Nature, God (ahab in moby dick)...
i hope that helps... feel free to email me if it's not clear
