Super Dooper Mighty Final Fight!

[Gors]

Selout, as described in the Spriting Dictionary, is a shorthand of 'selective outlining'. That's what you were doing; you were 'selecting' parts of your outline and 'shading' it (in other words, you aren't using a single color to outline). Since this blends the sprite more with the background, it can only be used in some cases, limiting the backgrounds the sprite can be put on top of. Also it's necessary to discuss said terms because this way you'll know about it and how to use it properly.

As for the Guy sprite looking unfinished, it's because you shaded him like a blob, and not with the clothing folds, like it's supposed to be. Check the official sprites to see how they texturize the fabric. Finally, I dislike how the hair gets over the face of both, making it hard to read their faces easily.