You need to set the background (bottom layer of the file) to the same color as your web background. Then you won't see the white area around your letters when PS makes it a transparent .gif - I am sure there's another way to do it, but this has always proven effective for me. Maybe a set transparent color command?
hsrpete: am using a background image and not color..I'll try some more w/ transparency w/o resorting to creating the gif w/ the same background. needlehost: How and where do I set the colors to absolute?
sri, a suggestion. When saving as web in photoshop, go to 'matte' settings and set it the same color as your background (black in this case) and transparency should be on - assuming ur background is transparent. Your preview will show you a black outline around your SR. Should work.