SO ANYWAY.
Materials: Adobe Photoshop or similar program (I use Photoshop CS, but 7 should also work. No idea about Elements), knowledge of how to use it, pressure-sensitive tablet (or leet mouse skillz), ability to draw.
Step one: Get a base.

Your base should be bald, with the face already present. Tektek can help. Mine is wearing a dress that I edited on before.
Step two: Block in the front.

Make a new layer above your base. Use the Pencil tool, so you get a hard, slightly-jagged edge. Practice making smooth curves with pixels. Draw the outline of the front of the hair with the Pencil, then fill it with the paint bucket - make sure Anti-Aliasing is turned off, and that tolerance is set at 0.
Step three: Block in the back.

Long hair has parts that go behind everything else. Make a new layer behind your base. Do the same thing as with the front, blocking in the flat shape of the hair. Make sure all your outlines are connected before you fill. You can do this by hiding your other layers, and reactivating after the hair is filled in.
Step four: Detail.


Lock the transparency of both hair layers. Take your Brush tool, at only one pixel, and a color darker than your base. Start brushing in the strands of hair in the dark color. I did the 'front' layer first, then moved onto the 'back' layer. Keep fiddling until you get them right. Editing avatars is no different from drawing on paper when it comes to how hair falls, so find a 'How to draw anime hair' tutorial if you need practice.
Step five: Shadows.

I'm about to blaspheme and tell you to use the Burn tool - you know, the one that everyone tells you that you should never ever use. It has its place, and its place is shiny things such as hair. Use it with a soft brush, about 10 pixels, and low exposure, set on Shadows. Burn in a few darker areas. Decrease the size to 3 pixels, and add some more detail to the shadows. Do this on each hair layer.
Step six: Highlights.

Go back to your Brush tool at one pixel. Take a color lighter and brighter than your base color, and add in a few little highlights to the hair. Stroke them vertically, along the strands of hair, but don't go overboard. Only put them where light would logically fall. On hair, that means it goes in a horizontal band around the head; this band sometimes takes on an elliptical shape. Add more bands of highlights on the back, wherever the hair would be curving forward and back so light would hit it.
Step seven: Speculars.

And now, more blasphemy. Time for the Dodge tool. As with Burn, you want to use a soft brush and very low exposure (even lower this time), but you want to set it to Highlights instead of Shadows. Brush lightly across the bands of higlights you already painted in - straight across, horizontally. Concentrate more of it on the side of the edit where the light is coming from. Add a little bit more detail, if needed, with a one-pixel brush (still the Dodge tool) going vertically, as with the painted highlights.
Step eight: Upload the sucker.

As if you don't know how to do that. But before you do, DON'T FORGET THE EYEBROWS LIKE I DID xd