There are several ways to do this. First double click your background layer(your image) and name it.<br>
Then make a new layer and move or copy/paste your textured background. Make sure this layer is moved below/behind the image. <br>
Then click on your image layer (the top layer now) and use your marquee to select your image. <br>
Then set your feathering by going to select, then feather. Then go to select and inverse. Then hit your delete key.<br>
Go to your layers palette and merge visible.<br>
I think your problem has been trying to change your background layer, this always results in the deleted area being white. The background layer must be renamed in order for the deleted area to be transparent.<br>
Roxie