1. First, open the picture you want to work with. For this tutorial, I'm going to be using a icon base I made - but you can do this effect on ANYTHING. Big pictures, small pictures, anything. ^_^
2. Make a new layer by going to layers ---> new raster layer (make sure it's raster and not vector.) When the window pops up, just press OK.
3. Now you have two layers. (If you don't have the window shown in this picture open, on the top bar there is this picture: . Click it to open up the layer window. The background layer is the normal picture. Layer 1 is the layer we will be using to make the transparent border, so make sure that's the layer that is highlighted.
4. Now we make the border. Click on the tool on the side and click it. Zoom in on the picture and do whatever you want to it. This part is up to you! Go wild with it. I'm doing the simplest type of border you could make for this tutorial.
5. Go to the and look at your icon. Pick a color that is NOT IN YOUR ICON. This is very important. Then color in the parts you want to be transparent. For mine, I picked green, because green isn't in my picture at all. (Note: If your brush stroke is huge, click the tool on top. This opens up a window called 'Tool Options - Paint Brush'. Make the size 1-3 if you're working with icons.)
6. If you're all done with the icon after this, go to layers ---> merge ---> merge all. If you did it correctly, your layer window should only say background.
7. Now, move over to colors ---> set palette transparency. Click it. A window pops up.
8. Make sure your box is identical to mine and click OK. ANOTHER box will pop up.
9. On this box, click on 'Set the transparency value to palette entry'. Keep the number on 0. You see that box next to that line? Click it. ANOTHER box with pop up with a whole lotta colors.
10. Find the color you used as the transparent color (remember how mine was green?) Click on that color in this box and click OK. You will go back to the box you were on before. You SHOULD see that your color replaced the old color in the box you just clicked in step 9. When you're satisfied that you picked your transparent color, click OK.
11. To check and make sure you did it right, go to colors ---> view palette transparency.
12. What SHOULD happen is pictured - notice that the green is gone from the spaces I wanted transparent. If yours is like that, you did it right. If not, you did something wrong.
13. When you're satisfied, save it. MAKE SURE YOU SAVE THIS FILE AS A .GIF file. Transparent parts will ONLY work if the file is .GIF. You now have a transparent icon. ^_^
Also, when you save it, it will still look like it has the color part on it when you open the file. Don't worry. When you save it to LJ, it will pop up normal and how you want it. :)