Create a new transparent image, 200x200.  Use the selection tool set as a circle.  Have your rulers up and put the cursor at 100x100.  Draw to within one block of the edge.  (see image below) Flood fill with your ornament color choice if you have airbrushed your image with a color.  In other words, use the same color to flood fill.  For erased images, flood fill with white.  I'm going to go over the airbrushed image first.

Unselect your colored circle.  Add a new layer and then add your tubed image on that layer.  You want to make sure that the square tube image will cover almost to the edges of the circle.

My first tubed cat image looks like it will fit "purrfectly".  Now use the circle selection again and put the cursor back on the 100x100.  Draw your selection about the same distance from the edge of the circle as shown below.  Now invert the selection and delete.  Oh, and bring your opacity back up to 100%.

Make your first layer active.  Click on the background with the wand so that it is selected.  Invert the selection so the circle itself is selected.  Go to Images/Effects/Inner Bevel.  I like to use the presets that come with PSP6, so I used Pillow and Round both on my ornaments.  Choose which ones you like or customize the settings.  I'm going to use Pillow first on this ornament.

Ok, I can hear it now, jaggies!  Keep the ornament selected and invert the selection.  Go to Selections/Modify/Expand and expand by either 1 or 2 pixels.  Then go to Images/Blur/Gausian Blur and blur by 1.  This is going to give you a nice soft edge.  Since you are going to use these ornaments as tubes, you can get away with this and not run into the problem of turning them into a transparent gif where the soft edge picks up annoying color from the gif background color.

But wait.......I'm not done.  Ut oh.  Click on the background again and invert the selection.  Again go to Image/Effects/Inner Bevel.  This time use the Round preset.  See the image below the bevel settings for the final result. I have both a soft and shiny edge.

This step is optional according to your tastes.  Make the image layer active.  Click on the background with the magic wand and then invert the selection.  Again expand this by 2 pixels and Gausian blur by 1.