Okay. This'll be long.
Okay, from the top. You need two distinct ramps if you want to have clothes on your characters. Why is that? It's because if you use flesh shades on clothing, usually it just looks as if the clothing is full of holes and the flesh is showing below.
Secondly, it's not a bad idea to have a fighter wear complementary colors, just makes it more interesting than the single color hue palettes you've got going.
Finally, if you're going to have a bright thing somewhere, why not use the bright shades for highlights on the flesh? This isn't going to be animated anyway (or if it is, there's no point to cut corners, you've got a painful animation to do anyway) so the extra detailing is okay.
Subtle hue shifts are a good idea.
As it was mentioned, lighting a sprite from a side is not a good idea in fighting games, because when they turn around... does the world flip its lightsource too? This is a good reason to keep to vertical lighting and not horisontal ones. You might get away with a few degrees, but I'd watch it. I didn't adress this on the edit as much as I could, but you should keep that in mind anyway.
Contrastwise, the full-camera-flash white on the pants really isn't the best idea in the world, but it can work once in a while. If you find yourself doing it too much, you're basically going to tire eyes out and make more subtle speculars get lost in the whitewash.
There's no segmentation on the human body, no matter how packed you are which I think would deserve a black line. A black single dot here and there is fine, as is a full line and where a limb is over a torso or somesuch. But otherwise I think it's too much. Only when darkness contributes should one be used.
Anatomy and posture:
The was no ear.
Hands needed a lot of work, legs are too fat around the ankles and the feet a bit malformed.
A few invented muscles in the arms, and the connection between chest and shoulderpad a bit vague.
Neck tendons that connect to the head invented.
The back foot was in a bit of an impossible position given the 2d perspective. Even the one pixel difference I've kept seems wrong. I'd suggest losing the flatfootedness as told to by pkmays also, but I've kept it for the purposes of the edit.
People have nipples.
the armors in the hands are a bit too busy still. Simplifying is important for something to read well fast, as it should in such a sprite.
Usually, groups of threes are better than groups of twos, but I decided to simplify more on the various cloth tendrils being hit by what only could be a large fan throwing strong winds at the fighter. Also an issue. When the sprite turns around, does the direction of the wind also?
Remember that in shadow things aren't as detailed.