I'm trying to create a WordPress.com header for rotary7040pr.wordpress.com.

I have a layer for the background colour, and have created another layer for text and graphics. So far so good.

Now I have a graphic (http://www.rotary7040.com/images/Rot...dow300x288.jpg) that I want to place on the layer with the text, but I don't know how to make the 'white' part of the background transparent so I don't have a white box.

I also believe I need to use alpha channel so the shadow can blend in nicely, but I'm a bit of a novice at graphics.

Can someone tell me how to do this?