My method is pretty indepth.. it largely depends if I'm taking the story at hand seriously or not.
Lets say I'm not. I get a group of characters together, give them a particular character quirk, sometimes conflicting.. "put them in a room together" and see what I come up with. This generally creates a rather loose plot structure unfortunately.. so there's usually some retconing involved if you want to get anything out of it that's useable other than a bunch of characters trying to save the world whilst keeping the band together. One example of this was an intermediate level "training game" I created based souly on terrible WoW group experiences and how they would relate to a realistic fantasy setting.. like say, the Mage who can't stop breaking aggro, or the Priest who's forgetful.. there's also things totally expected like the slimey rogue who would totally betray the team if it was no longer convenient for him. I decided the best way to handle that is that it's no secret that he's untrustworthy.. but I also made him wise - wise enough when not to get involved, when the hero type goes in guns blazing.
If I am taking the time to do something seriously, I write an entire lore about the world my characters live in.. often this ends up being more indepth than the characters themselves. And I'm not really talking about just in their time period.. its things like, what are all the factions the game/story is going to cover? How they fit in the world? Why they exist? But also giving like really cohesive solid answers besides LOL CUZ WE'RE BAD GUYS WHO EAT BABIES and stuff. Trying to explain why "magic" exists and why monsters are just roaming about in the world is hard.. I end up with like a 30 page txt file, and then I go through each of the characters I want to include. I generally fall under the "no deadweight" philosophy.. so having a really good reason for these guys being around and involved is important to me.. like before, I give them quirks to set up their persona.. like how they would act under pressure, what's their flaws all that good stuff. Often writing for a villian to me is really what makes or breaks a story. If you can get above the whole Sephiroth thing, just standing there being spooky, and give the guy a real personality besides just an image, then you have something. Trying to figure out the villian is probably just as important as figuring out what went on in your world. From there I make footnotes of key events I want to happen.. figuring out who comes in where and why they're a part of the group.. and if they're really vital to the story or not. Sometimes the less developed characters on paper turn out to be the most interesting in practice. I love it when a blank slate just writes itself for me. From there it's a matter of connecting the dots.. I often go back and rewrite tons, changing details that seem more benefical if I come up with a really cool footnote I want to add in that I didn't think of.. it's a lot thinking and being patient.. letting the stew cook in your brain before you think about serving it.
In the end, its A LOT of work... hahaha.. which is probably why making a "serious" story for me is much to large of a project to do in just about any game.. I do find it to sometimes hamper my ideas some.