Guess what? In order to use a mask in Storybook Creator Plus, I use the same method as in my first post. http://geezee-whoknew.blogspot.com/2009/02/hi-i-go-by-geezee-and-follow-digitreats.html
I think that in order to use any picture and take negative space from it using templates, or mask or a shape works well as a paper element. This gives you the options to treat it as a paper. Any edits that you need done to the picture should be performed prior to using it as a paper element. Also, of note, leave plenty of space around the part of the picture desired for your end product. This gives you room to play with your item with more freedom. I use my undo button a LOT. I Love that thing.