Been working a lot with these lately, and found a good idea is to make a grid as a background. I use PSP (Might buy photoshop soon)
Make a 256*256 (or larger) Image With No Background
Create a background later, color it red...or blue
Go to View -> Show Grid
Go to View -> Grid Options, and set the width/height to 16 (or any multiple of your canvas size)
Begin typing the letters, highlighting the spaces inbetween and chaging their text size to make the text fit in the boxes
Repeat till your done
Convert your background to 0,0,0
Save as a BMP <--Important!
There are plenty of functions in the code library to display sprite text, but for now - Im off to work. Hope this helps someone
RPGamer