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Aftherthered,
To have tranparency on a picture you need to save it as a gif.
The only drawback of a gif is the support of 256 colours and your talking about a picture. No to lose quality too much quality you have to save it as a jpg (16.7 million colours).
Did you to consider this: Make a layer with the color of the background of your webpage. Put on top of that a layer with the picture (save the image now as a PSD so you can start easy over again if something is not goodlater on). Apply on that layer the "fading transparency" and merge the layers to one and save it as a jpg.
Ton
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