First off, we need to think of a gif to make. For this tutorial, I'll be using the Meroko and Takuto stuffed plushies as an example. The image of them that I'll be using for reference is below. (Click thumbnail for full version)

As you can see, I'll only be making a gif of just the rabbit and cat plushie. So I'll be guiding you through the process.

1.) First, create a .bmp file and name it anything you want, like 'Gif1.bmp', and open it up in MS Paint and go to Zoom -> then Custom -> to 400%. I am using Windows Vista, so options may be different, but the features are similar. Once you have zoomed in 400%, expand the white palette to a size similar to the one shown below. Or at least it should say something around (88,98) on the bottom right corner of the window when you put your arrow on the bottom right corner of the white palette (circled in red). (Click thumbnail to enlarge)

2.) Next, have the original image opened next to the MS Paint window zoomed in around the size you want your gif to look on the white palette when it is now zoomed in 400%. I zoomed the image in this amount.

3.) Now go to the MS Paint program and click on the Line tool and choose the color black. Begin by drawing the rabbit ears with a similar vertical slant line to match the original image. Drag the line tool and let go when you think the line matches well with the original until you draw both the ears. Now you should have something similar to this.

Remember, your gif doesn't have to look exactly like the original image. You can always make up your own details or modifications along the way to make it more unique or in your style.

4.) Continue drawing with the line tool until you have drawn most of the rabbit. To make the curves with the line tool, you should drag the line and let go little by little in a curved fashion. This might a little getting used to and mastering. When you come across the part where the words are covering part of the rabbit's body, try to improvise or use other images as references to complete the body. This is what I have now.

Remember, this is not the size of your final gif, but the size we will be working with when making it. And please remember to ALWAYS Save your work after everything you draw, you never know what might happen along the way, and all your hard work may be lost. This has happened to me many times, so I have learned from experience.

If you want, you can zoom back to 100% to see how it would look if in normal size, which is shown below.

If you are happy with the size and the results, then let's continue!

5.) Next we will zoom back to 400% and draw the cat. Do the same thing with the line tool and drag and let go of the line little by little to make the curved shapes. Again we come across the words covering part of his body. Try again to improvise or use other references for the completion of the covered legs by the text. This is now what I have.

Remember, you can always zoom back and fourth between 100% to 400% to check how the final gif would look and make any changes to it to get the results you want.

6.) Now once you have the basic outline of the whole gif, it's time to go to the coloring!
Try to choose colors that would best match with the original and just use the flood fill tool to fill in the spaces with the appropriate colors. Make sure all your black lines are closed completely so you can color accordingly. If you are having a hard time coloring the smaller spaces such as the details of Takuto's collar and bell, then you could zoom in to 800% if you want. This is now what I have.

Now let's check again and zoom to 100% to see if you are happy with the results.

Once you are satisfied with the basic solid coloring, Save your work and let's proceed to the shading and touch-ups!