Chapter 8 talks about some of the commonly encountered NPCs in the Grimm Lands, as well as the differnecnes between Major and Minor characters. If the NPCs you are building are just simple, run-of-the-mill everyday folk, you might use some of the minor character templates (possibly adapting them a bit to fit the particular character). If you are building major characters you can also follow a similar format to the one they do when building The Rotten King, Jack, etc listed in chapter 8 under major characters.
As far as I know there isn't any set "system" for building NPCs, you sort of just make up what you want to. Basically, just go off of the stats of the NPCs they have built in Chapter 8, and then modify them to fit the character image you have in mind. To give you a bit of a reference point, you can look at the sample list Bad Dog put together in this discussion www.fantasyflightgames.com/edge_foros_discusion.asp
So for instance if you want your NPC to be cooler than Mother Goose, but not as cool as Baba Yaga, a grade of 10 for Cool would probably be appropriate. Comparing your character to the ones on this list, as well as the others in Chapter 8 would be a good way to get started.