I have Photoshop CS, but I assume it's probably the same for PSE.
You just duplicate the photo- so you have 2 layers. The top layer you would desaturate and then choose your eraser tool and erase whatever you want to show through from the bottom layer- make sure you zoom waaaaay in. (You can use a mask, but that get's a little more complicated.) Then you would merge those layers together and drag the photo over to your LO.
HTH
