Wow. This took a lot of effort to get it done. You may see the following links that I have filed under scrap to get to this stage:
Stage 1: [link]
Stage 2: [link]
Stage 3: [link]
Stage 4: [link]
Stage 5: [link]

It has finally come to a stage where it may be used as a base for other chracters that I would want to be Male Elf.
This was one hefty work. Here is what my log has to say:

Project Chaos And Order Pixel Art - Effort

Naras Basic Line Art
--------------------
...Form...................... 1.00 hr MS Paint
...Scaling and Color Tweaking 0.50 hr MS Paint
...Bases of different Races.. 3.00 hr MS Paint
............................. ---------
..... T O T A L ............. 4.50 hr


Elf Coloured Base
-----------------
...Pallete and first color... 0.50 hr MS Paint
...Second cell shading....... 0.50 hr MS Paint
...Third cell shading........ 0.50 hr MS Paint
...Fourth cell shading....... 0.25 hr MS Paint
...Border color change....... 0.50 hr MS Paint
...Eye pallet and coloring... 0.25 hr MS Paint
...Anti-aliasing Phase I..... 0.75 hr GraphicsGale FreeEdition
...Anti-aliasing Phase II.... 0.75 hr GraphicsGale FreeEdition
...Anti-aliasing Phase III... 0.25 hr GraphicsGale FreeEdition
...Anti-aliasing Phase IV.... 0.50 hr GraphicsGale FreeEdition
...Selective Outlining....... 0.50 hr GraphicsGale FreeEdition
............................. ---------
..... T O T A L ............. 5.25 hr

Now, I have Human, Giant and Orc to do. And after that the four races again with female gender.