To understand the specific methods of doing variations of an original image of a piece you need to know your way around PhotoShop.
The first thing you need to know about is the MODES available in PhotoShop. The MODES available are
B&W (great for Line Art where everything in the image is Black OR White)
Gray Scale (great for scanned images of shaded pencil drawings)
Indexed Color (great for charts & graphs with a limited range of colors - only 256 colors are available)
RGB (great for working with digital color photos and the Mode PhotoShop was first developed for)
CMYK. (great for working with images destined for high end magazines and Coffee Table books)
When working with a color photo image you need to use the RGB Mode (Red Green Blue that your monitor uses for displaying color). RGB Mode enables the use of LAYERS, a very powerful feature to have as you willl see.
You'll need a "canvas" to do variations of your original image. Here's how to create your Canvas in PhotoShop 5.5. The Elements procedure adds "New Image From Clipboard" option which will automatically determine all the variables shown below based on the image in the Clipboard.
Note the Yellow Fields values you should fill in for your New Canvas - as shown in this illustration.