It's quite an involved process. It would be hard to explain it all in a forum post...You first sculpt your character using oil-based clay, then you have to lay it on it's back and create a "layup" around it using water based clay. Then you build walls around this using something like foam core. You need a material like UltraCal to mix with water and then pour it on top of your character & layup. After letting it dry, you remove the walls, flip the whole thing over, apply a mold release to the dried UltraCal, then pour it on THIS side. After it's dry, you pry the mold halves apart and take out your clay character. Then you need to build your ball & socket armature or purchase one from a place like Animation Supplies. Once you are finished with this, you will need a foam latex kit. You have to mix all of the ingredients very carefully and then use something like a spatula to pour it into your 2 mold halves. Then you place your armature into this gooey mess, squeeze and strap the two halves together and stick it into the oven.
That is the short explanation, but there is soooo much stuff in between all of these steps and important details that I have left out. Perhaps searching some sort of video tutorial would be more help. 