Using png (transparent background) in movie

I have converted an image which originally had a white background to a transparent background using Photoshop. It is a png file. When I shrink it down and use it in Flash, the edges are not sharp - They kind of bleed out onto the transparent bg. I tried using a jpg version of this png but no improvement.

Any ideas about what I might be doing wrong?

most likely the resolution difference between your moie and the trans png. Go back to Photoshop and give it a smooth transition around the outside

OK. How would I go about doing this?

with the eraser tool and a soft brush.