First I simply take a regular circular brush and draw a black outline of a tree.
This tree has some interesting branches on the left side. When drawing forests, I like to keep anti-aliasing on.
It really doesn't matter though. Now before we add color, here is the palatte I use for tree trunks:

Now take the darkest brown with a small brush size (I used a size of 5 but for 320x240, I suggest smaller of course).
Paint some curvy lines on the sunyside of the tree, which in my case is the left side.
Study this picture to learn where the light will hit the tree. Forget about the tiny branches for now.

Next, take the darkest blue (more of a purple), and do the same to the shady side of the tree.

Now we'll add a little bit of highlight.
On the sunny side of the tree, add the medium brown mainly to the left most (and top most) edges of the tree.
Try to leave the darkest brown showing in the tree's center.

Do the same with the lighter blue to the right most and bottom most edges.

I usually add a little more highlight to the sunny side using the lightest brown on the sunny side.

Now, using the "smudge" tool:
Blend all those colors in. I use a brush size of about 15-20 for the trunk with a strength of 20%.
For the smaller branches, reduce the brush size. It's better to work small.
Also, make sure the smudge tool is set to "Normal".
Smudge the colors slowly to get the blend you want most.

Next, I take the eraser tool and sharpen the edges of the tree a bit. The blend tool tends to blur edges too much.

Now for texture. Take the smudge tool again, reduce the brush size to 3, crank the strength up to 90-94%,
and make sure the tool is on "Darken" mode.
For my tree trunk texture, I like to use vertical lines to represent the bark.
Take your tool and put it over a darker area of the trunk.
Now click, hold and smudge a dark line going up the tunk.

You'll get a nice dark line like in this picture.

Now do this many many times more and you'll get something like this.
Make the vertical lines (horizontal for branches that are horizontal) on the sunny sides and shaded sides of the tree.
Use this method to make any kind of texture you want.
If you want to smudge around the lighter colors, then switch the smudge tool on "Lighten" or "Normal" mode.

I made the highlights stand out more using the DODGE tool:

I set the brush size to whatever, and set the exposure to 20%.
Make sure the brush is set to "Highlights".
Now just brighten up the sides of the tree. I'd leave the middle part alone.
Now make a new layer above this one for the foliage.

What's a tree without leaves? For foliage, I use the #66 brush:


Turn this brush's size up to 90 px.
Press CAPS so the brush's large size doesn't get in your way, and using black, make the outline of the foliage.

Here's my foliage palatte.

Using the same brush. Use the dark green.
I try to make small "clumps" of patches for a more realistic look.
I also press more lightly for this part, making the dark green not as thick.
*Note* I applied a thin layer of dark brown to the tiny branches.

Now use the light green. I "press" or "distribute" the light green even more sparingly than the darker shades.
Apply the light green more to the top of the "clumps".
The bottom part of the clumps should be more hidden from light.

Now I just to the same for the tiny branches but on a much smaller scale. (Smaller brush size)

For Sierra like backgrounds, and since I started in 640x480, I like to pixilate the picture to fit the style.
If you're starting in 320x240 or 320x200, you may not need to do this.
Also, you could always start at 640x480 and reduce your entire image to 320x240 to get the same effect.
But to pixilate, go to FILTERS - PIXILATE - MOSIAC, and use a cell size of 2.
Any game you make with full screen mode, you'll notice the differences, and it will look good!
I pixilated both the foliage layer AND the tree trunk layer.

NEXT: ROCKS!