Photoshop Elemements 8 Paste Problem

Hello,
I'm new here. In Photoshop Elements 8, I want to paste a transparent logo onto a artwork image. The artwork is a BMP file and the logo is a png file. When I drag the logo, it won't paste. I see a circle with a slash. I tried converting the file to RGB because it said an index color file won't work. After converting the logo to RGB color, I can paste, but now the white background is transferred. I want the transparent file to transfer. I verified that the logo file has a transparent background. Can't figure it out?

The first screen: The way I always paste images, I simply left click and drag. You can see that logo is transparent and left the screen. The circle with a slash thought it was in lower right hand side of the main image did not copy. Main image is a BMP rgb file. Logo image is a PNG index file. This particular logo image is giving me a problem. Never had a problem prior.Second image: When I drag the logo image from Project Bin into main image, I get this window. When I convert the index file into rgb, I can paste but the background copies like this:

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