[fysiks]

You have to convert it to an image format that support transparency and doesn't distort the colors. Then, you simply replace blue (0, 0, 255) with transparency.

I'm not sure if Wally supports converting to a format with transparency so you might use Wally to convert it to PNG and then use another application like GIMP to convert it to support transparency.

If you're trying to use this image in the game again, it needs to keep the blue (and the index color format) so that it will be transparent in-game.

Editing a .wad of .spr file is something that you should do (if you want things to work correctly and not screw things up). If you need to change an image, you should create a new .wad or .spr and then use that new one instead of the original.

Note that it's been a while since I worked on these things so I might not describe things in the best way.