Re your other post, the link for Alice 1.0 is
http://www.alice.org/default_old.htm
I haven't personally tried it so can't predict what to expect.
Not sure exactly what your "sprite" question concerns when you say "not a .bmp". Obviously multiple poses would have to go as individual graphics or a list - haven't worked with either much but from what I have, the lists seem more flexible. (Other Opinions?

)
As far as getting rid of the background, the only thing I'm
really sure of is that Alice will support alpha level transparency for .png images - see the attached world (same object with and without a transparent background) or some of the special effects objects.
As to implementing this, I don't belive the basic Paint program can do it. Most advanced programs can - I usually use Paint Shop Pro but Photoshop also works fine, even the "light" version. However, once you go into a program that doesn't support alpha transparency or somehow has the option turned off - you lose it with usually no clue.

I recommend checking that the background is still transparent in your file i
mmediately before you import it as a billboard.
Jim