It was watching a gameplay video of the classic Gauntlet that showed me how to do sprites simply but effectively, at least the graphics that are required for sprites. In fact, Gauntlet's shadows might be more advanced than mine since the walls in that game have a "tapered" effect, which I'll add to my todo list. Anyhoo, here's how my shadows look now:-
If you compare that with the screenshot in the previous post, you'll see the marked improvement: no misplaced pixels between shadow effects, and now the shadow effects don't cover some of the walls near the edges. There's still a minor problem around doors to deal with, but I'm pretty pleased, and strangely, it almost worked first time which is always worrying.
Coming next: AI?