[jRaven]

Sprays...

Google wally_155b.exe and install Wally.
Use it's menu Wizard -> HL Color Decal
I'd suggest a width/height combo of 128x64 ( or 64x128 ).
After you get that to save you a wad file, you need to do three critical things:
1. The file size should be less than 11.7??? kB, so aim for 11kB or less.
2. It has to be named tempdecal.wad before you shove it in your gamemod folder (ex: cstrike,tfc,valve).
3. Make it read-only so HL doesn't overwrite it. Click,alt+enter=File Properties.

Sprites...

Google and install SpriteExplorer_v2.0.zip.
Use it to make new sprites from bitmap(.bmp) files.
Make sure you use a 256 color palette before making a sprite, or this program will handle it poorly and you'll probably get ugly results.
I don't know other programs, (google for their color methods), but in photoshop you can choose Mode->Color->Indexed ---> 256 color adaptive palette.

Opening your bitmap with MS paint and saving in 256 color may be a way to do it. I don't know how well that will work.

That's about all I know on the two topics.