Well, for the most part, I have been using the magic wand, playing with the tolerances and when I have an area selected I cut it. If I manage to get the object I desire this way, I cut & past it into a new image, enlarge it and erase any residuals. I usually have to do this until I get most of the background out, cut my desired image and paste into a new image layer and enlarge and erase residuals. I save as both a PNG or PDN and GIF to preserve transparency.
I have problems with sizing a new image layer over a different image layer. ie: cut out balloon over a scenic forest shot. The forest shot will be so big and when I import the balloon into a 2nd layer it is microscopic and changes the canvas & all kinds of weird bloody potato I don't understand how to fix. Consequently, I have been using MS Word and the GIF's & JPG's to layer images, but I seem to have the white outline issue either way.