unfortunately, due to the fact that i have no artistic talent, this section wont be very helpful to you
however, there are a few (a whopping total of three!!) things i do know that should help:

• the recommended resolution for your sprites would be 512*512 or 1024*1024.
  
• all of your sprites must be facing the left side of the screen, since LoRSteamworks will only let you make sprites that are facing left (they will be flipped when needed in-game).
  
• the recommended image format is PNG, and you probably cannot use JPEG.
  (or you could try using any other format that supports RGBA[en.wikipedia.org], but PNG is the norm anyway and i have no idea if the steamworks.exe accepts anything else.)
  
• there is a guide written in korean* that talks about the same things as this one, and it could assist you in your sprite-creating process.
  (also its just better than this one in general, so unless youve got a language barrier in your way, go read that one instead.)

that will be all for this section, :sadface:
(*the guide is no longer available for some reason...)

the LoRSteamworks thingy is a handy tool given to you by the director himself, you can use it to make either head sprites or body sprites.
due to its simplicity, there isnt much to talk about, but ill try my best to explain things.

finding LoRSteamworks.exe

1. you can find the Steamworks.exe by right-clicking on Library of Ruina (or clicking on the gearwheel), then clicking Manage > Browse local files.
   
2. there, you should find the "Steamworks_LOR" folder. open it and youll find LoRSteamworks.exe.
   
3. upon opening the executable, youll see a page with four tabs, heres a bunch of tables explaining them:

1. Mod Info (only used for uploading to the steam workshop)

2.1. (Custom Head) front head sprites (theyre pretty self-explanatory, so you can just skip this part)

2.2. (Custom Head) side head sprites (again, pretty self-explanatory)

3. (Custom Book) body sprites
(a note about Slash, Penetrate and Hit: with how theyre named, one might assume that each of them is associated with a specific type of offensive dice (Slash, Pierce, Blunt), but they can be used with an offensive die of any type.
examples:
the first and second die of "Steel Knuckles", both are Blunt type, but die #1 uses Vertical/Slash, while die #2 uses Horizontal/Hit/Blunt.
the third die of "Repressed Flesh", which is Blunt type, but uses the Penetrate/Pierce sprite.)

now, on the Custom Book tab, you may notice things such as Pivot Position, Head on/off and Book Name, heres what each of them mean:
Pivot Position
determines where the base of your sprite is, this should always be put at the bottom of your sprite, right between the legs (assuming that youre making a humanoid one).
Pivot Relative Head Position
determines where the game will put the librarian head sprites on your sprite, turn Head off if you dont want it.
Front Image
the image of stuff to put in front of both the librarian head and the body sprite.
(body sprite is the bottom layer, head sprite is the middle layer, front image is the top layer.)
(note that all of these will still be a layer below the librarian's Battle Symbols if Head is on.)

now that youre done with the sprites, you can either save them on your local drive or publish them onto the steam workshop.
head to the "Save/Publish" tab of LORSteamworks.exe, and youll see two buttons there.

1. "Save without publish"
saves your mod as a file on your electronic device at wherever Content Path is, can be used to make sprites for custom receptions without having to upload them to the workshop.
2. "Publish To Steam Workshop"
clicking this will (obviously) upload your mod onto the steam workshop, using the info from the Mod Info page as details for the actual mod. note that it will always be uploaded as hidden.
this will also save the mod as a file on your drive at wherever Content Path is.

well, since youre at the bottom of the page, i would assume that youve already read through the rest of the guide.
i hope this will help you understand how the steamworks thing works, now go ahead and make that book of a popular meme, or that book of a furry oc, or that book of an anime character...
(look, i dont know what my fellow librarians like, okay?)
if you happen to be dissatisfied with certain parts of this guide, please do vocalize your issues in the comments.
good luck making your books!!

list of links:

• book used in demonstration #1 (the good one)
  
• book used in demonstration #2 (the bad one)
  
• guide icon art