I am capable of dreaming up interesting settings and even placing things in a world, but I have trouble dreaming up characters and plot. Example: my first aborted attempt at a steampunk story ended when I realized I had literally asked for help coming up with other steampunk-y tropes to fit in to my story. I was creating a screensaver, not a story.
Meanwhile I read amazing, compelling, and driven stories that keep me thinking about them long after I finish. These stories have strong characters and plot. The characters act naturally and convincingly, and the plots are character-driven, not setting driven. I want to be able to write a story like these.
I know there are a million and one variations on "How do I write a good story?" My specific question is "How do I imagine characters and plots the way I can imagine settings?"
For context, I'm trying to write an adventure delivery quest: a character discovers an ancient, terrible weapon, and has to take it to be destroyed (very Fellowship of the Rings, I know.)