I tried loading some of my PNG's with transparency in PS7, and when I do, I notice that there's no layer mask or alpha channel. So what you might try is simply deleting your background layer and selecting those areas of your image you want transparent and then clearing them.
Or if you want more control, make a layer mask as described above, edit that to your liking, and then right click it's thumbnail when you're all set with your pic and select set that to the selection, and then you can clear the stuff you don't want that way.
Or if you want more control, make a layer mask as described above, edit that to your liking, and then right click it's thumbnail when you're all set with your pic and select set that to the selection, and then you can clear the stuff you don't want that way.