I poked at the reference images a bit.
The color ramps look rather basic. Five bits for each RGB channel, SNES hardware limit. One common light and one common dark color. Three ramps of three additional colors, one ramp of four additional colors. Some of the ramps are simple linear changes in RGB space, some are not, but most look like a linear pattern that was then tweaked by hand. Ramps are separate, no reuse of colors other than the light end point.
Use of colors in the sprites is pretty straightforward. Sketch the sprite, draw in a shadow line. Any pixel in shadow gets a color, all the pixels on the light side are the lightest color. Outline with the dark. The end result is the overexposed look.
A bit more detail:
The color channels are all clamped between 16 and 248. That's a bit odd, I would have thought they get clamped between 16 and 240 per the YUV color space. More likely these sprites are just a rip from the original game, so I'm not sure if this should be clamped or scaled.
The sprites were also made to output to a CRT display, not an LCD. There was a thread in the general discussion area from a while ago about CRT emulation that goes over some of the differences. I remember digging through the MAME source code to see how they had done it. I think they used a small blur followed by spectral sharpening. The result was that colors would bleed a bit into the adjacent pixels and then get hue shifted towards one the RGB axes. This effect was stronger in the light pixels than the darker ones. The final result was overall darker as well. My memory is a bit fuzzy.
If you wanted to create a sprite that looks like the ones posted, just reduce your palette to 16 colors, using the upper 5 bits per channel (each R,G, and B should be divisible by 8 ). If you wanted something that looks like how it actually looked on the screen you'd need to hit the sprite with a filter of some sort afterward. User Ai might know if there's a plugin for Graphics Gale that already does this.
The witch sprite in the OP:
I like the hair.
Something in your process or tools is generating an enormous number of colors (116). That's going to make it difficult to edit.
The sprite looks like she has a broken upper arm just where the shoulder and glove meet.
I think I've seen the hat before on another sprite. Same angle too. Come to think of it, I think I've seen this same sprite design before. Blue hair, dark purple witch outfit. But it was a younger look to the character. Did you post this a while ago under a different user name? Or is there just some common reference that I'm missing? Doesn't really matter, just curious.
Good luck with your sprite,
Tourist
Edit: removed unexpected smiley