Start with an object: This is a basketball that I got from www.metacrawler.com Any format will do.
Start MS Photo Editor and open the image file. Select the transparency tool and click on the section you want to make transparent.
From the transparency dialogue box, change the sensitivity of the tool as warranted by the background. Here, the background appears to be solid white, but it’s really composed of hundreds of shades of white (move the slider to the far right for 10% color similarity).
Keep using the transparency tool until all the remaining bits of background have been selected and turned transparent.
When you’re satisfied that all the background is now transparent, select the entire image (CTRL-A) and copy it (CTRL-C)
In Authorware, simply paste (CTRL-V) the image in the presentation window
Resize the image by dragging it from a corner control box while holding down the SHIFT key.
Double-click the image and, from the Properties dialogue box, select Transparent mode.
I can see from the finished product that there are still a few white pixels that I could have made transparent (but you get the idea).