This is another artistic bit, but there is no need to use a Drawing Pad here. In fact, I would recommend using a mouse or whatever device you're accustomed to just clicking things with. In this step, we'll just be dealing with large chunks of color and some minor pixel-pushing.

Start by selecting a commonly used, flat base color of something in your drawing. In this example, it will be a dark brown for the base color of the fur. Select the fill tool, and make sure that its options bar reads like this: Fill: Foreground, Mode: Normal, Opacity: 100%, Tolerance: 0, Anti-aliased not checked, Contiguous checked, All Layers not checked. Now just start filling in some of the proper areas by clicking in them. There are a few dangers you may encounter:

Stray Pixels: There are some small areas that may be isolated from the bulk of the colored areas. Do not simply fill them in, because they will still be separated and won't work well with shading and other steps down the road. Use the Pencil tool (this is located in the same icon space as the Brush tool -- just hold down the mouse over the Brush icon until a menu pops up, and select the Pencil tool there) with a single-pixel brush, zoomed WAY in, to connect them to the rest of the area with the same color you filled with, or seal them up with black. The stray pixels are, however, very minor errors that would probably be overlooked by almost everyone in the final piece.

Gaps: Now these are dangerous. If there is a gap in one of the lines surrounding the area you're trying to fill, the color you're filling with will spill out into adjoining areas. The first step to treating these is to undo the fill! Then, look for the offending gap in the borders, and fill it in with a black single-pixel pencil. Try again, but large areas may have many gaps.

A note on layers: Now that we have something meaningful on two layers, we can see the nature of it more easily. Take a look at the three images below. The one on the left has the ink layer invisible; all you see are the jagged edges of the color layer. The one in the middle has the ink layer on, but it is behind the color layer. There are smooth edges between the character and the background, but not where there is color. If this is the case, we simply go to the layers window and drag the Ink layer above the color layer. We should get something like the image on the right, where all lines have smooth edges.

Ink is off

Ink is behind color

Ink is in front of color

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