That's the process I use.

What I don't understand, Shanin, is why your outlines are so distorted. In some places they're too thick and in other's, they're not there.

It it's because of the blackness around them when you C+P, then it may be easier to do a screen capture, cut the bit you want, make a new file and paste the sprite in. You'll save a lot of effort that way, since it won't interfere with the outlines, and you can simply fill out the colour.