Promote to Layer : go to LAYERS >> PROMOTE TO LAYER
I wrote this a few years ago in PSP 7 - which I no longer use. (I don't use PSP at all as a matter of fact. Photoshop ftw!) I am not sure if this is even applicable to the newer versions of PSP but here it is anyway =)
We are going to use a line art in this case. First open the line art :)
Increase the colors : press SHIFT+CTRL+0
(thats a zero not the letter) this will increase the color depth to 24 million
colors...
Promote to Layer : go to LAYERS >> PROMOTE TO LAYER
Delete the Background: Use the wand tool
and click inside the area
surrounding the line art.
Then go into SELECTIONS >> SELECT SIMILAR
Then press CTRL+X, this should remove whatever colored background is surrounding the line art. Now press CTRL+D to remove the marquee
Color The Line Art : First see the RECOLOR tutorial to recolor the lines in an easier, faster way; Then come back here and color in the line art as you like. Once you have your line art all colored in and ready to share, you will want to continue on in order to save it as a transparent gif.
PLEASE be original and do NOT copy my coloring k? I KNOW if you invest the
time and effort into coloring yours it will be as pretty and likely even more
so!
Add a new layer ( go to LAYERS >> NEW RASTER LAYER )
Floodfill it 
with a color that IS NOT used in your art at all. (Most
people use that neon green #00FF00 but any color that is not in your art will
work) In this case I am using the icky green :p Now send that layer
to the bottom by going to LAYERS >> ARRANGE >> SEND TO
BOTTOM.
Make the color you floodfilled with just now your background color (THE BOTTOM BOX)
Go into COLORS >> SET PALETTE TRANSPARENCY >> a dialog box will pop up, check off optimized octree, error diffusion, include windows colors and reduce bleeding, click on OK
Next check off SET TRANSPARENCY TO CURRENT BACKGROUND COLOR. CLICK ON PROOF.
The area around your line art should disappear or maybe change colors
while the dialog box is still open AFTER you click on PROOF. That
means the transparency worked.
Click on OK.
Your transparency color ( for instance my icky green ) may or may not reappear. If it does you can go into COLORS >> VIEW PALETTE TRANSPARENCY and it should go away then.
Then save your art as "whatever.gif" make sure you scroll up in the save type thing to COMPUSERVE Graphics Interchange :)
If you are using PSP 7 like I am, I would suggest getting to know the gif optimizer. FILE >> EXPORT >> GIF OPTIMIZER I prefer it over the Set Transparency that I taught you above but I know the optimizer is new to PSP in version 7 and Im not sure if it is still available in version 8.
Hope this has helped someone :)