First you have create a folder with you theme name in mod directory.

then create a start.php file with following code

<?php

    function your_theme_name init()
    {     }
    register_elgg_event_handler('init','system',' your_theme_name init');
?>

now create a manifest.xml file with the following code

<?xml version="1.0" encoding="UTF-8"?>
<plugin_manifest>
    <field key="author" value="your name" />
    <field key="version" value="your version value" />
    <field key="description" value="your theme discription"/>
    <field key="website" value="your website" />
    <field key="copyright" value="(your compu right value" />
    <field key="licence" value="GNU Public License version 2" />   
</plugin_manifest>

Now you can create a folder named views and inside that another folder default.

you can put your css file here.

what i suggest is, download a theme from elgg and see the folder structure and create your own.

http://docs.elgg.org/wiki/Themes

The easiest method is to install any existing theme plugin and make the changes there.