Enough with theory for now. Let's get back to basics. Much of what I write is with more of an eye to developers and publishers but here's something for the roleplayers and would-be roleplayers out there.
Use setting as a guideline for creating an original persona. Understand how the world works, what the stereotypes and archetypes are, and then figure out an angle that confronts a contradition in the setting or asks an interesting question about it.
For example, as I learned more about the Star Wars setting, I found myself wondering how early Seperatists, pre Doku, might feel about the Rebellion. They don't love Palpatine but they've just as little love for The Republic or Jedi. Suddenly I had a new kind of character on my hands. "I wuz reb before you wuz reb..." /grump
In Eve Online you've got an almost incidental theme of immortality as a byproduct of cloning. Several players have latched onto that to ask interesting questions about what it means to be human and where pod pilots really fit in. Others ask questions about their home cultures and brew up characters to explore or resolve the gaps and inconsistencies. The Khanid Kingdom, for example, is a bit of a cypher that's alternately described as an ultra-xenophobic theocracy of fanatics and a cosmopolitan melting pot of traders that's a melange of different cultures. Digging down into the fragmentary backstory one can invent many different ways these could both be true, to an extent, and the result makes for a good tale.
Ask yourself what game systems or character classes interest you most and work from that angle. What powers do they have, how do they work, where do they fit in? Now read between the lines - what inspired these classes? Are there other sources that the creator of the setting borrowed them from that you can further steal from to come up with a new kind of character that fits into the gameworld? Let's take Star Wars again. Instead of getting bogged down in Star Wars fanon you can go back to the original Star Wars and ask yourself what inspired Lucas. Where did he get the idea for Jedi, gunslinging smugglers or bounty hunters, or the Empire. Tap the original source. Samurai/Arthurian knights, the wild west and Rome/Nazi Germany. Now you've got a huge quiver to borrow ideas from and ones that both fit the setting and have never been seen in it before, perhaps. Just make sure your new concept fits by checking sources.
Another avenue is to hold off on a character's identity until you see who else is out there. Go in as a secretive blank slate and see what kind of characters you run into. Develop a backstory, slowly revealing it over time, that fits well into the group you end up associating with and that they'll find interesting or useful. It's still handy to employ strong mannerisms, most observers don't look past the surface of a character, but underneath that, the 'why' of why a character acts as he does, doesn't have to be fleshed out immediately.
If you're a brand new roleplayer this is often your default setting if you pick up roleplaying after the fact. You've already got your character and these new roleplaying friends of yours are going to shape his identity just so you can fit in. Still, I'd recommend new roleplayers, given the option, work on biography first before making a character. Biography is like a rudder - when in doubt about what your character might do, as opposed to you the player, consult biography. New roleplayers benefit from having a rudder so they can put out a strong and consistant personality. Advanced roleplayers have been through the drill a few times and already have a pretty good internal sense of what kind of behavior is believeable, or interesting, without necessarily knowing everything about their character. The "chia pet" approach is probably best considered an advanced technique.
Keep it simple. The more detail you add into your biography the more you'll feel constrained in improvising detail, detail that might be dramatic or flavorful, in live RP. Some roleplayers favor very detailed biographies to help them visualize a character but that's a technique that tends to lead more to forum fanfic and away from live, dynamic, interaction.
Keep it comfy. Play a kind of character you'll enjoy playing for a long term and that suits your personality. MMOs aren't like any other kind of roleplaying game. There's no DM/Storyteller out there creating situations to suit your character. You'll be playing this character for a long time, maybe years. Some roleplayers can do a great job with odd, eccentric or downright malicious characters and tend to see themselves more as experimental writers, "I wonder how this kind of character will work", than typical roleplayers and generally are skilled as such. It's hard when playing malicious characters and villains, in particular, to seperate yourself in the minds of other players as a good guy OOC who is just pretending to be an IC bad guy from the hordes of a-holes out there who are a-holes IRL and use roleplaying as an excuse to act that way. That's probably worthy of another blog entry by itself.
Know the setting. Make sure your concept fits into the world. Immersion is a cooperative process and if there's only one thing players should be able to agree about it's how the world works. This can be easy in games like WoW where the setting is wafer thin and doesn't even take itself very serously. In games like Star Wars Galaxies, Lord of The Rings Online or Star Trek Online you might have a bit of work to do. The playoff is deep roleplaying which can touch on themes and subjects far beyond what can be manifested in terms of raw gameplay. In SWG and LoTRO it's also quite possible to play a character who doesn't know his world very well. Frodo led a very protected life before Gandalf dragged him off as did Luke Skywalker before Obi-Wan got to him. Never trust old dudes with British accents. *nods*
Well, there are some pre-coffee ideas and it's hardly comprehensive but hopefully it's food for thought.