CS2 has had a lot of redesigns, and this is one of them. Since the Layers Palette (not Palate) has been redesigned, you cannot use CTRL+Click to do a cutout select. Instead, what you have to do is - instead of CTRL+Clicking on the Layer itself, CTRL+Click on the square preview image of the layer. Better yet, activate "Auto Select Layer" and then shift click on the layer in the canvas. Its very annoying to someone that's used to the old ways, but then there's nothing anyone can do about it.