It's Been A While But I'm Back With Problems!!

Okay! Hello every1, it's got to have been at least 6 months since i been on here asking for help but well, what can i say, my game took a nose dive into a wall for a while Any hows! here is my really stupid annoying problem I have....

I downloaded a few sprites to use in my game! when i inserted them into the actual game and played it they were surrounded by a white or black border, now! i know its something to do with the transparency etc.. after looking for hours on clues on why this is happening.... I came across a threed that mentions to use photoshop....

Im using photoshop 7 so if any1 out there can tell me step by step how to get rid of these annoying white or black borders using photoshop 7 I will be eternally greatful. I know there is easier ways of doin this transparency thing, trust me i have tried for days and i just cant get it to work!.....

Thankyou now to anyone who helps me with this problem!