Please help!! I am stuck... Here is where I am having issues....

Ok, the size my banner needs to be is w960 h196 Do I make the canvas this
exact size at the beginning to work with or shrink it later?

I don't understand if I am supposed to edit an image before I import it in the
banner. I have tried importing a 4x6 image, shrink it, use the magic wand, use
feather, but it doesn't look good at all. When I use the layover color, it
just looks like a cover and the picture does not look sharp.

Is it better to outline the photo and get rid of everything around it?

Another problem. My website is a blue color (#4682B4) not really dark, but I
want to have maybe the background of the banner white, but the overlap a
lighter blue.. For some reason, the color I use for my canvas is the same color
used for the overlap. I can't figure out how to get around this.

In this banner, an example I found online. It looks like someone just outlined
the photos, deleting any background and put them up against a white background.
I don't see how the magic wand works for this.
http://members.optusnet.com.au/willowb71/banner.jpg

I must be doing something wrong. haha