Anyone who's seen inaluct or Okenido's LPs for 1 & 5 should be familiar with the basic process.
1. You need an alignment (Good, Neutral, or Evil). Good and Evil characters cannot coexist in the same party, so Good vs. Evil is kind of a whole-party decision (but neutral characters don't have to worry one way or the other). The game enforces alignment after a fashion; sometimes enemies will offer you a choice between leaving them in peace (good) or attacking them (evil), and acting against alignment can cause spontaneous alignment reversal (again, neutral characters don't care one way or another). Since enemies are going to be horrendously overpowered at the start, being able to bypass fights without worrying about alignment conflicts can be a godsend, so I would recommend sticking to Good/Neutral. It's up to you guys though.
2. You need a race (Human, Elf, Dwarf, Gnome, or Hobbit). This will determine your base attributes as follows:
STR IQ PIE VIT AGI LUK
Human 8 8 5 8 8 9
Elf 7 10 10 6 9 6
Dwarf 10 7 10 10 5 6
Gnome 7 7 10 8 10 7
Hobbit 5 7 7 6 10 15
3. You need to allocate attribute points. The game randomly assigns a pool of bonus points from 5-9, but rarely will give out 15-19 (and potentially even more; 25-29 is incredibly rare, and higher pools are astronomically unlikely); these points can be spent on a 1:1 basis to raise attributes up to a maximum of 18. When signing up assume that you have a minimum of 9 points to spend as I will reroll any lower bonus rolls (anything less would be outright cruel given what we're up against), and also please post where you would like any extra points to go in case you're lucky enough to roll in the teens.
STRength: Determines the effectiveness of physical attacks.
IQ: Determines the rate at which Mage-type casters learn Mage spells.
PIEty: Determines the rate at which Priest-type casters learn Priest spells.
AGIlity: Not 100% sure how this works; I *think* it determines success rate of disarming traps, and also may affect initiative/defense?
VITality: Determines hit point growth (based on class and random rolls).
LUCK: Not sure what specifically this does but I guess it's good to have?
4. Lastly you need to choose a class. This is directly based on your alignment and attributes (after you assign your bonus points):
Fighter: any alignment, minimum 11 Str.
Mage: any alignment, minimum 11 IQ.
Priest: cannot be Neutral, minimum 11 Piety.
Thief: cannot be Good, minimum 11 Agility. (can disarm chests, although still has some risk)
Bishop: cannot be Neutral, minimum 12 IQ and 12 Piety. (Casts both Mage and eventually Priest spells, but only starts with mage spells and learns spells veeeeerry slowly; can identify items)
There are three additional classes, but starting as these is unlikely verging on impossible:
Samurai: cannot be Evil, minimum 15 Str, 11 IQ, 10 Pie, 14 Vit, 10 Agi. (Fights similarly to Fighter, eventually starts learning Mage spells at a mediocre rate)
Lord: must be Good, minimum 15 Str, 12 IQ, 12 Pie, 15 Vit, 14 Agi, 15 Luck. (Fights similarly to Fighter, eventually starts learning Priest spells at a pretty good rate)
Ninja: must be Evil, minimum 17 in all attributes. (Fights similarly to Fighter, disarms chests similar to Thief, bonuses when unarmed/unarmored, can score critical OHKOs)
In the exceedingly unlikely event that anyone survives to level up, you do randomly gain +/- 1 to random attributes each time you level up, and can change class later to any that you qualify for, thus it is possible if you level up enough to get into the advanced classes. It's theoretically possible to start out in them; about 1 in 50 Elves, Gnomes, or Dwarves will have enough bonus points to qualify for Samurai, but for getting Humans/Hobbits in or qualifying anyone for Lord the odds are about 1 in 10000. Ninja... don't even think about it.