Beth,

One of the differences between PI and PSE is the use of objects and layers. When you're working with UFO files in PI, each object is a layer, and the entire layer is the object. Hmm...that didn't make much sense, did it? Okay, if your son is the object, he doesn't need to be on a transparent background because the layer isn't a rectangle--the layer is only the shape and size of your son. The only time you need to worry about transparency in PI is when you create a new document (or when saving as a PNG). You can choose to have the background be a color or transparent, but all layers above the background will work the way I described above.

As for the easiest way to cut your son out of the background, I have no luck with the lasso, since I trace terribly. I tend to select a rectangle which includes my subject, convert it to an object, place it in the new file with the background I want, and then use a combination of the magic eraser and regular eraser to remove the old background.

Hope this helps!