That is one cute fox demon thingy 
I think you should remove the black outlines and give him a little more texture since he appears to be covered in fur but it is only visible atop his head.
Maybe you should consider changing the position of the tail or not drawing his knee because his figure is not recognizable at his actual size and since the tail is so close to the knee it is causing clutter on the sprite.
One last thing, you should try changing your highlight color to a more orange tone and your darkest shadow to be purplish.
Great response! Thanks for all the advice. I got around to fixing up the picture according to what you've said - I tried to make him a little fuzzier by blurring the edges between shades and adding a little bit of dithering.
I changed most or all of the outline to a color more related to what color the beastie is, but this has always been something that troubles me. I'm not sure how best to color an outline, if not all one color.
The color changes make a world of difference. Could you explain why that is? If you don't mind!
Here's the edited picture:
I also made a few design tweaks, like adding little claws and removing the hint of pupil-d eyes, going for a brock-like style instead. It looked like that before, but it wasn't the intention.
