To make an image transparent, you need to use the right graphics program. There are many different options out there from the gimp to photoshop. The big is to fine one that has an a transparency option and allows you save the file as a png or a gif. For this example I am going to show you how to do this in a program called photo filter.
1. Copy your image into photo filter
2. Figure out the color in your background image
It is easier to use a background with one solid color.
Use the replace color option to simplify the background
3. Now Click On Image - Transparent Color
4. Click yes to the message about 256 colors
5. Select the color of your background and click okay
Chose the color that matches your background
For backgrounds with multiple colors repeat these steps
Adjust the tolerence slider as needed.
6. File - Save As
7. Make sure to select the save as type as gif or png