I'd dig through the threads on here for different ways to do sculpture. there are various materials that can be used and people have put up step-by-step threads with photos.
as far as paint, I usually use non-toxic acrylic latex. I seal with water-based polyurethane, which you can brush on or get in a spray can. the important thing is to let it off-gas and dry very, very thoroughly because before it dries, the fumes can be toxic. once dried, it's water-resistant and non-toxic.
oh, and you can seal cracks with aquarium silicone, but again, you have to give plenty of time for drying.