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Re: a question about creating new layer and putting the "Selected area" in the new la

Mr Tom is correct.

 However,I want to speak to you about your work flow for trying to accomplish this. First, you need to double click in the layer labeled Background. PS will now convert this to an editable, normal layer. You can re-name it if you like. Next, add a totally blank layer (click the icon that is to the right of the little folder icon at the bottom of the layers panel) and drag the renamed layer above it. Now, in the layer with the sky and balloon, use the Quick Selection tool (not the Lasso tool) to select the sky area if this is what you want to eliminate. Once selected, enter Delete. Now your image is transparent. Do not flatten, just save as a PNG. If you save the file, close it, and re-open it, you will see it only has one transparent layer.

To shorten this,once your background is transparent, you can File/Save for Web. Select Png24 and Transparency and PS will make a new file that you can name.