B/W Logo - Remove background and recolor.

I am new to AI.  I am trying to convert a Black logo jpeg.  I want to remove the background and recolor the logo to match a new design color theme.  I am working in Photoshop Elements and AI.  The transparency settings work in AI to remove the background and show the black.  However, when I convert the logo to a lighter color, all the art is lost.  Any advice?

LA2Z,
Basically, AI works with objects of vector art, not raster images, and does not recognize individual pixels in a JPEG.
The most likely advice given in the Illustrator forum would be to recreate the raster artwork as vector, which would also make it infinitely scaleable; otherwise Photoshop is the natural application to use; I am not sure whether it can be done in Photoshop Elements.
The Illustrator forum is here:
http://forums.adobe.com/community/illustrator/illustrator_general

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