While I agree that most of the methods people have talked about here could be considered note-taking in different forms—and can certainly be helpful—I am concerned that many folks think character construction only works this way. You construct your character down to the last nibbin of personality, and then create a story using this fully-fleshed-out character. What's left out of this process is the way you get to know a person in real life. A person does something you notice, and you immediately think certain things about them. You might be spot-on right, or totally wrong. You don't know WHY they do what they do, until you move in closer to find out. The fact that you, the writer, don't understand (at first) what makes a character tick is very valuable to storytelling. If you construct your characters beforehand, using an intellectual rather than intuitive method, you run the risk of knowing too much about these characters before you even start your story. They become characters who will never surprise you. You know all about them. They are the way they are and do what they do because of their abusive childhood. Or someone made fun of their looks way back when, and this has ruined their self-esteem. Or they watched some bad guy kill their parents, etc. The other way to create a story is to make a character DO something surprising—something that surprises you, the writer. Then move backwards in your head and figure out why. This leads to really rich and unmined seams of story material. You aren't likely to discover these seams in a preliminary list of characteristics, no matter how you generate the characteristics. Yes, it does mean 'pantsing' it to some extent, but I think that's where excitement comes from, for both the writer and later the reader. Excitement comes from NOT knowing what makes a character tick, but wanting to find out.
In real life you are just the reader of a book written by God (or you're watching a movie with exceptionally good visual effects) and it's first person, limiting your knowledge. When YOU write a book, you have much more freedom, playing an omniscient god if you wish My opinion is (and this is only that, not a universal truth) that you should know much more about your characters, setting and story than what's in the final book. You can reveal your character's traits as the story grows making the reader want to know him better but your character will be more consistent and believable if you, the writer have a clear picture about him in your mind from the beginning. It's boring but who said it will always be fun?
