Select Open under the File menu and select the file "Lily.pict".
Rename Background layer to "Lily". (will allow for transparency) or start with a new Transparent Photoshop document.
Create a New Path from the Path Palette. Draw a path around the lily using the Path Palette Pen tool.
From the Paths submenu choose Make Selection. Select a 0 pixel Feather Radius in the Rendering dialog box. Then select Turn Off Path.
From the Select menu choose Inverse. Cut background out by hitting the delete key.
Duplicate layer using the Duplicate layer command in the Layers Palette. Name the bottom layer "Shadow". Make the "Shadow" layer active by clicking on it in the Layers Palette.
Move "Shadow" layer below the "Lily" layer.
Check the Preserve Transparency box. Fill the selected Lily with black. (use Fill from the Edit menu or press option-Delete.)
Use the Move tool to slightly offset the shadow.
Lighten the shadow. Set the Opacity slider to 26%.
Soften the shadow. Uncheck the Preserve Transparency box. Select Filter -> Blur -> Gaussian blur 6.0 pixels.
Create a new layer and name it "Background". Move it to the bottom.
Select the Gradient tool. Choose two colors separated by only one color.
Drag the Gradient tool to create a nice background blend. Save your completed Lily with the shadow and gradated background.
