Layers can be a little tricky Robert, especially when you're not experienced with photoshop. Once you learn how to use them however, you'll never understand how you got along without them. Layers are one of photoshops most powerful tools. Ok so now to answer your question.
Your picture of your wife with the white background needs to be on a layer other than background. To change this all you need to do is rename the layer. Right click on the layer and select "layer properties" and rename the layer "Picture" or something. This will enable you to to seperate the white from your picture and leave the surrounding areas transparent. Try rereading my first post. Before all that however, you should read all of the begginer articles in this forum and visit Mark's begginers section
http://photoshopgurus.info/beginner.shtml
Keep on the path. [bustagut] [bustagut] B7