1. Program is Photoshop (downloaded CS3 Beta the other day, it's rather nice

), as I've said elsewhere, I'm also quickly falling in love with Daz3D for designing poses, judgeing perspective, foreshortening etc.
2. Typically, I start with a rough sketch, done fairly quickly (an hour or so... give or take). If the sketch is to my liking (and the person commissioning it), I'll then start to add more detail to the sketch, untill I feel it's ready to be "painted". When it comes to the colouring, I tend to block in the large areas with an "under paint", that is, on layers underneath the sketchs. At this stage, I worry about only the most rudimentary lighting. Once the main colours are blocked in, I then move in to the actual painting. This is done on layers above the sketch, so that it will eventually cover most of the black and white lines. The majority of the shading, and things like character and item lighting are usually added at this stage. This painting stage is by far the longest. Once that's out of the way, I'll usually tinker with the overall "feel" of the picture, adjusting the global lightness, colour curves etc on their own seperate adjustment layers. Also, at this point, it's possible to add extra shading and lighting by masking parts of these new layers.