So whenever I try to make a new item I need to get new sprites and stuff (you know the deal) and when I get to the sourcerect part I usually go to websites such as image map generator to get the sourcerect. However for some reason in the game, the sprite is like half cut off/floating nowhere near the characters hand. Can somebody explain why this is happening, please? Thank you.

Make sure you've defined the sourcerect as {x,y,width,height} instead of {x,y,right,bottom}. The upcoming Steam version includes a sprite editor that makes defining the sourcerects much easier, but for now you could use something like Paint/Photoshop/Gimp to check them.