Translucence and Transparency

This isn't necessarily an icon question, but it could be applied to them, so I thought I might as well ask. :)

At my work they have Photoshop Elements (I use PSP7, so that is what I am most familiar with). My boss wants to know if it is possible to make a subject translucent. I imagine it could be done with layers; something like screen. But is there some other way?

Also, is there an easy way to make a background transparent? All I know is to open up a new transparent image, select whatever and paste it onto the transparency.

Thanks. :)