Well its great that you see the problem.
This is a great sign.
I am unable to make an edit right now but check out the 'lines' post in the noobtorial thread which you can find in the sticky reads link in my sig.
Check out cure's pixelart thread while there too :)

Maybe I can help a bit with basic theory for rendering.
Pretty much every 2D artist will tell you that a good piece of art is 90% planning, so before anything else let's start planning:

First off, when you try to render stuff, always think about the forms. This is important because it determines how light and shadow appear, right?
That's why even complex things, like human heads, are constructed of simple forms first, that resemble the head's shape.

Now, let's say your character's body is - more or less, the shape of a cylinder and a sphere put together. And let's also say, the light source is positioned slightly in front/ upper right of the objects.
This already sets the core of your character's shape and you quickly archieve a better understanding of your own design. Now, slowly start forming something more complex, by adding or cutting off more basic forms - like for example cones as arms and legs, eventually sculpting it into the creature it is supposed to become. When doing so, always keep in mind, that everything interacts - aka things cast shadows or reflect their own color onto near surfaces, etc. This however is already a whole more complex, and probably not so important in this case, since you're not aiming for super-realism.

Finally, once this is set, consider it as a sketch and work with it when creating the final piece.

I hope this isn't too confusing, I just thought it might help to understand forms and shading a bit more. I've also included a picture that could be helpful aswell.