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If you can create the exact image you want in PS then the issue is just how you select that image and save it as a seperate element for your website.
BTW if you choose gif you can select a transparent colour which could aid your blending it into a background.
Hope that helps
If you're willing to risk older browsers seeing some strange, ugly edges on your buttons, using PNG format would allow the transparent canvas idea to have the desired effect. Check out this page [libpng.org] for browser support test images and screenshots from various browsers...
How to get rid of the "halo" and "jaggies" in PS6 w/ transparent gifs:
1. Make sure you have your image on its own layer with no background.
2. File>Save for web
3. Make your setting gif and use the smallest amount of colors you can without affecting the appearance of the image.
a. Make sure Transparency is selected.
b. Set the Matte color to the closest match of the background color you will be placing the image on. If you are unsure then set the Matte to "None". Click ok and save your image.
3. Matte puts a thin outline around the image to get rid of halos. Setting matte to none should get rid of the halo but might still leave the image a bit jaggy around the edges.
4. If your image will be on a dark background use either a black matte or a matte that is near the color of the background to get rid of the jaggies.
Hope that works for you.
In Illustrator, I just slide a rectangle of color in behind the image, then copy & paste to PSP & save.
Even if you use a "transparent" background, on some drawing & editing programs it will still pick up white jaggies.
As someone said, though, always work in high color, then reduce to 256 or less after you have the image looking like you want it.
When you're drawing the image, they may be the "same" color - but each pixel has a different percentage transparency, depending on the curve. Once the layers are merged, each of those partially transparent pixels of what was one color now become an array of subtly different colors, depending on the original degree of transparency.
The game is retaining all those edge pixels which are subtly different colors - and not shifting their colors too far in the indexing process.
I like to use Select > Color Range with the slider set to 0. I make sure the image is a true layer (not a background) Once I've made the selection with Color Range, a click on the Delete button makes all the selected pixels transparent.
Then I can go to ImageReady and play with the compression options, knowing my transparency is all set. The image looks ugly unless it's against the right color background, but when it is in its right place, it looks great.