If you select the color option under the mode, you can change it to RGB which allows you to do whatever you want to your image.
The issue has to do with the mode that you are in. If it is a TIFF or GIF file that you are opening, when you click on "Image -- Mode" you are likely to see "Indexed Color..." with a checkmark next to it. Be sure to select "RGB Color." Once you have done that, you can simply double-click the background layer in the layers palette to unlock the image.
That works. Thanks for the tip! 2020, I'm taking PS lessons with CS3 and iMac 2009 while the instructor is using CC. Ha ha...!