Horizon Image

Hi. Still trying to make a Starrynight photorealistic Horizon image from
http://www.wmich-astro.org/home_pics/tt2a.jpg (this image already has the
clouds removed).

I have a copy of photoshop elements. Using the magic wand I can create a
layer to mark the clouds area. I've saved a psd and created the starrynight
txt file. If I run starrynight and load up the psd file, I see a solid
color where the clouds in my image should be and stars where my image
horizon should be.

Question(s). Is it possible to create a horizontal image with photo
elements? If so, how? How do I build the alpha-channel as suggested in
http://www.starrynight.com/help/photorealisticHorizons/

Any advice would be greatly appreciated...Dennis