to model the character you can use very good free modelers like blender or wings3d; to rig it and animate it you can use fragmotion: http://www.fragmosoft.com
it's cheap (US $20)
Although I understand you can rig and animate in Blender as well, which is free.
frag motion seems can become quite handy even if only as a converter fixer, like a different milkshape...those tools are allways handy, sooner or later...