Nobody answered so I'll help as best as I can, though I'm also working on figuring this whole thing out..
1. I, you, have to accept that you are now a 3D technical artist, an animator, a game designer, a visual fx designer, sound designer, the whole sh-bang. Took me a long time to realize this and at least now I can move step by step and tackle each one as it comes along.
2. Blender, or if you have bottomless pockets, Maya/3DS Max/ZBrush/SubstancePainter/etc. As beginners, use Blender. It's really solid for a free program (beyond solid, actually..) and the other 'industry standard' approach costs literally thousands. So learn Blender.
2a. Now when people say 'learn Blender' it comes across the wrong way imo. You DO need to learn the interface, learn the key commands and be very familiar with the program. Do you need to be a MASTER sculptor and modeler if you're just downloading models from the internet? Obviously not. It's important and helpful to understand those paradigms so watch a few tutorials to give yourself the background knowledge for what you actually need to do. Go back and master it when you want to.
3. Add-ons & Plugins: There are a ton for Blender but look for 'jiggly bones' 'jiggle armature' 'mustard tools', anything that will help with animation (up to you, play around with Blender, fail and fail until you get more familiar with what you need), I paid for 'Uefy2.2' which still requires some touch up work but helps re-rig models and export them so Unreal can accept it. 'Mr Mannequin Tools' is another one. You'll find what works for you as you go along, there are many others, everything from genital rigging to, ahem, liquid simulation.
4. It sounds like a nightmare but I've found this to be the easiest way to get Unreal to 'work'. You need to break down, BREAK DOWN, whatever model you're using in Blender (not a button, this is a concept, wait). Unreal is actually pretty good at piecing everything back together. Tedious, yes, but when it works, oh man it feels good. So. Make a new folder, get the character skeleton, the meshes, the rig(armature), and materials/textures (little tricky, I haven't gotten there yet), get them into the folder separately, almost like when you download a character and theres the file and textures separate, make THAT. Then import one by one into Unreal, match the mesh to the skeleton, remake your materials piece by piece (tedious but it'll work) and apply them, sort out any bugs and wah lah! Frozen character in T Pose.
5. You can animate within unreal engine from scratch, or, if you carried over your individual pieces correctly, as I understand it you can animate in Blender and export the animations, import them to Unreal. If unreal can match the skeleton in your animation FBX to a skeleton in your project, that animation should pair to that character/skeleton.
6. Character Customization. There are at least 2 different character customization sample projects on the Unreal Marketplace for free, download them and have a look at the Blueprints.... It's... A lot. Get a little creative, mimic some of what they're doing and use it as a reference, but from the looks of it, character customization is not a system you'll build in a couple hours in Unreal, those graphs are massive. Still, it's very helpful to reference and learn from.
I get pretty hard on myself, try to play around with it, have fun, and make something really simple. Customize the face from stoic to a smile, or a smile to a frown, before trying to design a full-on clothing system. Hope this helps!
~pajamapanda
