No, the shortcut has not changed. You should check if another application is hijacking the key, maybe?
Try also to use the zoom tool, holding alt, it should zoom out.
I checked the zoom tool and it works fine. I do not know what could be
hijacking the alt key. How can I find out?
Then no software is highjacking it.
Did you reset the marquee tool ? (Right click on its icon on the option bar)
Are you dragging when you click inside the existing selection?
Let's back up. I was trying to use a "shrink wrap" trick I learned on
CS2. By using a marque selection around an object with a solid background,
hold down the alt key (option key on mac) and click on the background color
inside the selection. On CS2 it would snap the selection around the object
eliminating the background. Say an Air Balloon against a blue sky.
Rectangle marque would snap around it like a vector pen selection. Why do
this instead of selecting the sky and then reversing the selection? Because
there are more then the one balloon. I understand the drag but that is not
snapping around it, instead it creates another rectangle marque inside or
if on the edge changes the selected area from a rectangle to an "L".
Yes, as an alternative to the trag..., erm, magic wand one can use the quick selection tool.
Nope, wasn't using magic wand.
You must have been using some other tool in addition to the rectangular marquee tool, because as far as i know, what you described is not possible just using the rectangular marquee tool alone
Then it must have been another program as Photoshop's rectangular selection creates... rectangular selections.
The procedure you describe can be done, as R_Kelly showed it with the magic wand, or the quick selection tool, with a single alt-click inside a rectangular selection, if the background is uniformly colored.