Templates in PSP8

Okay, I'm going insane, I really am. I've looked through all the tutorials/memories and I'm getting nowhere. For some reason what I'm doing doesnt seem to relate to what is written on the screen in this journal. I can't get parts of my templates transparent - I'll do the Set/View Palette Transparency thing - paste it on top of the image I want poking through and I'll have my green template dumped on top of it. Or - if I'm lucky - the wrong bit will be transparent. Please ... someone tell me what I'm doing wrong.

Any response here/MSN - mj_113@hotmail.com/AIM - shellie0055 will be so greatly appreciated.