You need to have your monster sprites prepared and cut into 32x32 pieces (make sure you have all the sides - west,east,north,south and all the animations). Once you are done, you have to import them into a data editing tool (dat/spr editor) and set up the configuration for the sprites so that they are turned into an actual game entity (in this case- looktype).
I would give you a more detailed explanation, but the problem here is, today, you don't have access to many of such tools. There are old tools for this (BlackDemon's editors) which don't work for versions higher than 8.54. There is Noxitu and Storm editors, which could be buggy or unfinished from what I saw, but can be used to an extent. They should work with some newer versions. Ultimately, you have this tool that I'm keeping my eye on lately - looks incredible but I haven't used it yet:
http://otland.net/threads/objectbuilder-10-32.208334/
The best way to learn how to use any of these is to look at how previous monsters/items were done and create new ones by basing those values on what you saw was entered/used in whichever object you used as a reference.
I'm personally using BlackDemons, but a lot of people have moved on from versions such as 7.6-8.54 so I don't even want to bother explaining.