Here is what I did for my AP.
1. The Players made their characters. I did a 25 point buy. I had veto power for any race or class that I felt didn't fit the theme.
2. The Players got to do physical descriptions and some described their gear. (Like the Fighter with his weapon).
3. I wrote their backgrounds. I used the background generator to get some ideas and then went from there. The physical descriptions also helped.
4. In a dream/nightmare, Lowls places a ring on their finger and then they worked for him.
5. In another dream/nightmare (which they have not received yet), Lowls changes their names. So the Fighter Jason became Janos when he 'worked' for Lowls. The Cleric Kyra becomes Klara.
6. I wrote one creepy dream/nightmare for each character which involved them killing someone. At the end of each dream/nightmare, they look forward to get a bonus/reward for the bad thing they did in the dream. So the Fighter beat someone to death, the Cleric sacrificed someone, etc.
7. Any character can have any dream and they are all first person point of view. Because the characters worked together they had knowledge of the dream from either watching the other character perform the evil act or listening to the character brag about what they had done.
8. Anything done for Lowls is a dream/nightmare. Anything related to their background is a rush of feelings and emotions.
9. The only time I use a character name is when it is the Name Lowls gave them. Every other time I use the player name. This has become fun in book 2 because they keep telling the Townfolk that is not their name and the Townfolk tell them it is and some have accused them of lying.
11. After they introduce themselves, their Evil sides are going to manifest, have a brief statement about how they are not going to be turned into some bad memories and are going to sacrifice the good portion to Hastur to help cement their power.