Step 3: In the layers palette, name the cleaned up pencil sketch something apppropriate, like, um...pencil sketch... and set the blending mode to multiply. This will make the layer, which acts as an outline, transparent to any layers below. 
Step 4: Add another layer underneath the pencil sketch layer (call it something like color selection) and add flat colors to all your elements, like what I did here. The colors don't have to be true (but be kind to your picture...); the idea is to create areas of color that you can quickly select and adjust later. Good contrast between adjacent color areas is important here to keep your colors distinct.
When you're finished painting, copy the color selection layer and name it something like color render. This is where the real color work will take place.
Finally, you should either remove the bkg layer or merge the color selection layer with it (to keep the color selection layer opaque). I'm told that Painter (which is where we will import our .psd file) becomes unstable with more than four layers, so we don't want to encourage it! Save your masterpiece and close Photoshop (for now).
(in the image below, I merged the color selection layer with the bkg layer and renamed the result back to color selection as shown)
Step 5: Open up your file in Corel Painter. Notice that all your layers are intact -- in fact, you gained one, the Canvas. For the reason stated above, it may be a good idea to merge the Canvas and color selection layers together. Make sure the color selection layer is highlighted, then go to the menu bar at the top of the window and select Layers->Drop. Here's what your layers should look like now:
Feel free to rename the Canvas layer if you like.
The color render layer is where you will want to do all your painting so make sure to select it. Photoshop blend modes conveniently convert to the same behavior in Painter -- only now they're called composite methods (the person at Corel who dreamed this nomenclature up should be fired). So Normal is Normal which means you don't see any layers underneath and the pencil sketch layer on top remains transparent. So all you have to do is concentrate on working over those flat colors in the color render layer using the vast array of painting weapons at your disposal.
I followed Elizabeth Dulemba's lead and gave the Oils--Round Camelhair brush a try. It's easy enough to pick from the Brush Selector Bar:
To save time, you'll want to check out Painter features like custom palettes, the Tracker palette, and the Brush Creator. We'll save these tutorials for a rainy day...
Step 6: While working in Painter, I recommend saving your file periodically, using Iterative Save. This will automatically save a new copy of your file in the native Painter .rif format, appending "_001", "_002", "_003" and so on to the file name each time you save. Very convenient if you need to go back and work from an earlier stage in your artistic process.Note: Because her files often get very big -- up to 500MB -- Elizebeth Dulemba tells me she prefers to use only a couple .psd files and saves back and forth between them.
Once you've finished putting the final daub of paint on the canvas and let it dry, time to save for the last time. From the menu bar, select File->Save As and
in the Save Image As window, give your masterpiece a name. Make sure the Save As Type field is set to Photoshop Files (*.PSD), since we'll be paying Photoshop a final visit. Click OK.
The Export Options window is displayed next. Select the RGB Color Space option and click OK. Go ahead and close Painter.Even if your art is destined for print, I have it on good authority (thanks, Elizabeth!) that Painters support for CYMK mode is not sterling, and every time you save a file in that mode, Painter will change the color. Try saving a number of times, and your original colors become a distant memory. Best to stick with RGB and do all the color correcting/CYMK work in an application that eats that sort of stuff for breakfast -- Photoshop.