The way I would go about this is to get the 2 people onto a new layer, then blur the layer beneath them. First priority is to get the background to black and white and the people in colour, which you say you can already accomplish.
The Next step is to use the polygonal lasso tool to select your people. If the polygonal lasso tool is not in your toolbar, right click the lasso tool and select it. You will need some practise selecting items with the polygonal lasso tool, before finalizing your work. Just click on the edge of Person A, then move around the object clicking where the edge changes direction. I recommend trying to capture Person A and Person B at the same time, which can be done by holding Shift on your keyboard whilst selecting the second person.
Right click within the selection, and click layer via copy. Then Go into your layers palette, and make sure the layer containing the background is selected, not the one with the extracted people.
The final step is Filter > Blur > Gaussian Blur, or you can choose another and play around with the settings.
Josh. _________________ Graphic Designer |