Filter > Extract
-by OGT

So, you just have to have that picture off the internet in your project? Hmm? There already is a background? Well with the Extract feature you can cleanly take a portion of a picture out and make the rest transparent. First thing to know, where is it? It is located on the top menu bar, under Filter, and called Extract. The short cut keys are Control+Alt+X.

When you have a picture you want to extract, open the extract menu, and you can start... The basic thing is to outline what you want extracted. In this case, the white around my cd doesn't look good when the back ground is green:

Go to the Extract Screen, and use the Brush tool to start outlining the parts you want to keep:
When the whole outline is complete, select the Paint Bucket tool. Then paint the areas you want to keep.
Then, when you are satisfied hit the preview button. Do the edges look "jaggy" and are there some parts it missed? Then use these buttons: And go around the edges with them. Clean edges rounds the edges and makes it look smoother, and make mask transparent button is basically an eraser for some missed edges. The final result (for my CD) is:

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