I used the Smart brush tool (F), the one with the gears, and painted over the gray curtain. In the drop-down select "Color" , then select any color., then paint over the curtain.
Of course, you can also delete the entire background if you wish, and replace it with a new background. If that is what you wish, let us know.
Here is what we have so far:
Good. Few questions.
1. What is the drop-down you are refering to choose the color? Cannot find.
2. Why is it that I cannot change the linear mask to solid?
And yes the final idea is to refine the hair edges so that the sigle or so hair would show and the add a custom backdrop.
For a studio portrait type background:
1. Set Foreground/Background colors to light and dark shades of a color.
2. Create a new layer and run Filter>Render>Clouds. To generate harsher clouds, hold Alt while doing the render. If the result is too harsh, soften with Gaussian Blur filter.
I have an example of this at http://forums.adobe.com/thread/986980?tstart=0, msg#4