Using a Halo effect on images sometimes makes them more dreamy or magical. This is a very simple thing to do. I am starting with the image of the space faerie below.

All you need to do is open up your image into PSP8. Next, to add the halo effect, click on Ajust >>> Softness >>> Soft Focus. (As shown in the image below.

A window will then pop up. Use the two dials to change the amount of halo. 50% and 50% usually work well. Once you are done with that, click OK. The window is shown below.

Then save and viola!
