In PSE11, how do I "crop" a photo into a circle?

I would greatly appreciate step-by-step instruction on how to "crop" a photo into a circle in PSE11.
I've created an invitation for my daughters 1st birthday and I want to add a circular photo of her on the invite, but I can't seem to figure it out.
I understand that I can't technically "crop" it but I need the image to appear to be circular by using the transparency feature.
Again, I need a step-by-step as I'm still new to PSE11...
Thank you! 

I'm curious as to why reply#1 didn't work. That is basic PSE stuff. Was the selection still active with marching ants as asked in reply#3? Perhaps somehow the selection was deleted before doing the inverse.
If you do get that to work, note that you first must convert the picture to a "regular" layer by renaming it from "Background" to anything else. Then the deleted portion will be replaced by transparency. If you do the delete on the Background layer the deleted portion is simply replaced by the color defined in the background color chip on the toolbar.

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