For each cursor theme (eg. standard), there are two variants: one with a pointer shadow, and one without. The reason for separate themes for the variants is to replicate the Enable pointer shadows option in Windows XP.

Within each directory (eg. with-shadow/standard), these are the contents:

cfg/ - contains config files that are passed to xcursorgen for each cursor (see the man page for details)

res/ - contains the actual PNG images for each cursor, which are passed to xcursorgen

index.theme - the actual freedesktop theme config file (that gets deployed to /usr/share/icons)

mappings - since there are lots of X cursors that are basically the same, the mappings file maps X cursor names to the cursor names found under cfg/ and res/ (formatted as (xcursor name)-->(cusor filename minus extension))

Developing a cursor theme

Armed with the above info it should make sense to you how to create a cursor theme:

Choose a name appropriate for the theme, create directories under with-shadow and without-shadow (create both /with-shadow/<theme> and /without-shadow/<theme>)
Create a PNG image for each cursor under <theme>/res (eg. /without-shadow/<theme>/res/<cursorname>.png)
- (if you're working on the with-shadows variant, use the Krita settings below to generate the shadow)
Create the xcursorgen configuration for each cursor under <theme>/cfg (eg. /without-shadow/<theme>/res/<cursorname>.cfg)
Create the index.theme file for both variants, please keep the naming/description uniform with the standard theme
- Basically the with-shadow variant should have an identical name/description to without-shadow, except the name should have (with pointer shadows) appended, and the description should have , with pointer shadows appended
Create the mappings file to map each X cursor name to the theme's cursor names, use the standard theme as a guide

Once this is all done, you should be able to package using the script. The structure of theme sources allows the script to work without any specific configuration.

(Useful) Generating an XP-accurate pointer shadow in Krita

You should be able to replicate an XP-accurate pointer shadow using Krita on the cursor images. Add a Drop Shadow layer style and use these settings: