Attached Link: http://www.geocities.com/scottspringer78/info/information.html

hi vern,

i made a quick step by step tutorial in pdf format covering the process of making transparent gifs in photoshop using embedded alpha channels. you can download it from the above link. make sure you view it at 100% in acrobat, or the screen captures will look wonky.

in addition, i posted a comparison between jpg and gif. both images were compressed using photoshop 6's save for web feature. the gif shows some banding but i think it is pretty minimal. if your image has lots of texture, like your arrow, you might not even notice the diffusion. it shows up on this image because the objects are so smooth.

well i hope all this helps. feel free to ask if you have any photoshop questions.

-scott