Making only parts of an image transparent?

[Spireguy]

I am trying to use a symbol from an image and I can't seem to figure out how to make all the white in the picture transparent while leaving the colored part. This way I could put the symbol with something else on my web page. I have seen the option to make individual colors transparent with the optimization option, but for some reason it automatically thinks that my PNG picture is a JPEG, which doesn't have the color transparency options. So when I do change the optimization options to PNG and do the individual color transparency thing and then click optimize nothing seems to have happened to the image other than having (optimized) written after the name. I mean even in Microsoft paint I can make the cut image transparent and place it over another one.

[steve.ledger]

Can you show us the image you are working with?

PS: MSPaint is a bitmap (raster) editor. Xara is is a vector program. It works with bitmaps in vector space.
Two distinctly different ways of working with images.

[Spireguy]

here is the image that i'm working with.
http://yfrog.com/n6carolinaurology1v2p

[steve.ledger]

Xara isn't a raster editor (like MSPaint or PhotoShop) as mentioned, so you cannot simply remove white pixels from an imported bitmap like you can with dedicated raster programs.

But, you can do a number of other things.
The longest route but by far the best for your image - is to redraw it as a vector image. This will give you superior quality and unlimited scalabilty.
It's a simple image and would be quite straight forward to redraw, my redraw of your image took 12 minutes, though I don't have the exact font used in the original.

Other options include cutting out the white areas using the shape editor or using MEDHI eraser LE to remove the white, though the fine type will be a problem.