Title is quite clear on the matter. How do you think up characters? To those of you running 500+ hour characters with no end in sight, what brought that idea into mind?

Me? Well usually, I think of a basic idea, such as a Spellsword, or thief. Then, what would they do? Who would they fight for, if they would even fight? Then I get them a name, usually using the Tamriel Rebuilt name generator.

I'll describe my latest character's thought process, to give a better idea:
since playing again recently I have done a few basic types, Warrior, mage, courier/fisherman. So I figured, why not a thief? Then I thought, "hmm, an Argonian thief!" So, then I created the character. Before entering the portal to Cyrodil (Using an Alternate Start mod), I thought, will he be in the guild or not? So I decided he'd be independent, and having added an extra fence in through a mod so I could pull off the independent act, I begun to play. Some details came along as I played, such as, he likes to dress sharply, and simple 2 gold pants didn't cut it. He had expensive tastes. He died to the imperial watch before I could figure out much more than that, though.

So, how do you do it? Do you make a character as you start up a new game? Spend time planning every little thing out? Or a mix?

In Morrowind I'd look for little unexplained, unexplored "niches" in the game's story into which I could plug my character's story. Dark Brotherhood attacks begin at level 1 in that game (which bothered some people, but not me). I thought I would build a character around these attacks. Salas Thurja had been second-in-command in the Dark Brotherhood years ago but had left because of infighting. This didn't sit well with the Night Mother, who framed Thurja for murder, landing Thurja in a Cyrodiil prison cell. The Emperor's pardon sent the Night Mother into a rage and so she began sending assassins to kill Thurja. Thurja was forced to travel to Mournhold for a showdown.

Or I hook my character's story into an interesting NPC. I noticed that Caius Cosades disappeared from the game partway through the main quest. So I invented a story to explain this for myself. I created the daughter of an ex-Blades operative, a man who had, years earlier, been given a dishonorable discharge when it had been discovered that he was a skooma addict. She discovers her father was framed by Cosades. When his addiction was about to be exposed, he framed his brother, her father, and went scot-free. His brother died penniless and in disgrace. When my character uncovers this betrayal she takes the information to the authorities in Ebonheart. Disgraced, Cauis Cosades is recalled to Cyrodiil.