Welcome to Pixelation Segesi
I highly recommend GraphicsGale free over MS Paint, it takes a little to get used to its awesomeness but it's so much more powerful. Plus it is
designed for pixels.
It's great that you're working to improve your skills. Here is an edit of your Link sprite as an example of what you can work on.
I took some notes while making it:
1. You are too cautious with your highlights and shadows. I had this same problem for many years in all my art, I think most people do. An easy remedy: if you draw (which you should!!!), use a darker pencil like 2B-4B as your main, this helps force you to get used to higher contrast. Also pay attention to the contrast in your favorite pieces, they almost always have good contrast.
2. Your colors are too close in value, spread them out! Think of each color as serving a specific value range, where it can (in most cases) be reused throughout the piece.
3. If you have colors, use them. For example, what rule is there that says your outline color should only be for outline? If you look back at your reference you'll see the bottom of the cap has a thick band of shadow, perfect for the "outline" color. Furthermore, what good is the outline doing you at all?
4. Usually, larger areas deserve more colors, smaller areas less. I took a color from the eye and added one to the hat, where it serves better.
5. As for the shading, here is where drawing practice comes into play. If you look back at your
reference, the shading is all right there! You just have to be able to see it, this is what's going to take a lot of practice—and it should be practiced independently of pixels.