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Just to add for your info,  the reason why you see "white" space when you use delete is because you're working on a flattened image. This is indicated in your layers pallete as "Background" layer (with lock). When you hit delete, it fills the selection area with the selected background color (shown in your Tool menu).

You have to assign this to a layer of its own.... double click the background layer in the pallete to make it an editable layer.