For the first 100 years of Elements, I've been able to flatten a transparent image to make that image be on a white background by going to Layer/Flatten Image. Now when I go to Layer/Flatten Image, the background remains the white and gray checked background. If I try to drop that image onto another file (white background with other images, it carries the white and gray transparent background with it. Seems like it worked as it should for the first few months of having E2021 but maybe not. What am I doing wrong and how do I fix it? Here is the images I'm working with. I'm not able to make the "transparent" area around the sad face, white when before pasting to the large image. Or maybe it's a constraint that started on the web.
Your question is not clear. Glenn thinks you want to have the background of the smiley face layer transparent so that anything behind the smiley face will appear through. But your question suggests to me that you want the background to the face to be white before you place it over the other items in the image. Which is it?
If you want there to be a white square with a smiley face placed over (and obscuring) the layer behind it, then that is what you have. And just to be precise, the white smiley face square is not pure white. It has varying RGB values throughout. The rest of the background on your image has values of 255. But, it does not have a white and grey checkerboard to denote a transparency.
If Glenn's answer does not satisfy you, we need to see a screenshot that includes your layers panel so that we can see the original smiley face before and after it was flattened. And also a screenshot of the layers panel of the photo collage image.
And my final question is: do you really want to obscure the items behind the smiley face square?