How to make a transparent background in a PNG file

I would like to make a PNG image with a transparent background instead of the white background. See this link for the image:
http://www.drifterandthegypsy.com/wp-content/uploads/2012/11/lookatthebrightside_11.jpg
I have a very old Photoshop program Photoshop 7.
I tried clicking on Save for Web and selecting PNG-24 and checking the transparent box but it didnt work.

Hi,
Try something like the following:
(click on the screenshots below for larger views)
1. Select the Magic Wand and set the same settings in the tool options bar as shown below.
    Click on the white area outside the yellow circle with the magic wand tool.
2. Go to Select>Modify>Expand and enter 1
3. Go to Edit>Cut
4. Go to Image>Trim and check Transparent Pixels
5. Go to File>Save For Web and choose PNG-24 with Transparency checked

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