Paint Shop Pro v7 » Faded areas
To make a faded area you only have to do two things. First: choose the tool called "Preset Shapes". Choose the shape you want, e.g. a square, and the colors you want to have around the shape as foreground color, and inside the shape as background color. Then, to make it a bit faded, choose Layouts in the top line of PSP, then Properties, then set Opacity to a lower number than 100. The higher the number is, the whiter area, the lower the number is, the more your background shows through... Here is an example:
I have this picture, that I've made of one background and one white horse, without background.
Choose the tool called Preset Shapes 
, the Tool Options box should look like this, and the colors in "Styles" should be black (the line around the rectangle) and white (the filling). The box "Create as vector" has to be checked.
When you have made the area as you want, click on Layers in the tool line, then Layer properties. This box will show:
Set the Opacity to a lower number than 100, the lower the number, the more fading...
Then, choose "Convert to Raster Layer. My picture now looks like this:
