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I just gave this a go too and the problem appears to stem from saving the image to use in 'Focus Magic'.

I tried both methods described and how the balloon is isolated doesn't matter.

When the image is saved though, Larry first 'Flattened' his layers while I assume the OP didn't.

Flattening removes the transparency and fills with white, and this works in the other software.

Out of curiosity, I selected the new 'white' background from flattening and deleted it, saved as PNG-24 and tried that too.......this also worked!

It also replaces the transparency with white so there is no advantage to this method, the transparency is lost one way or another and results in a white background regardless.

So, Larry's solution of 'Flattening' first seems to do the trick.

Nice one Larry!

Regards.

MrTom.