I've never understood this about Photoshop... why can't you simply copy and paste an image into a layer mask? The procedure that Jasonmit is attempting is something I've never succeeded in doing properly, and always ended up having to use a color range selection on the B&W image and then deleting from the image I wanted to mask. Retrocity, I tried following what you did there, but I ended up with a similar red picture to yours. How do you actually make the red area transparent? It seems weird that this kind of 2d compositing is far simpler to do in 3ds max. Even after effects handles alpha channels better.