If you're wanting to retain editability (in Powerpoint) while being able to manipulate transparency in Photoshop, maybe what you want to do is to create a layer mask for the Smart Object. A change to the Smart Object later might result in your needing to recreate a mask, but that still gives you editability with minimum fuss.
Changes to specific things (such as particular colors) could be accomplished with adjustment layers clipped to the Smart Object.
Noel Carboni has correctly pointed you to the root of the problem.
You cannot edit the Smart Object in Photoshop because it was not originally created in Photoshop or in any other application Photoshop can recognize, like Adobe Illustrator.
See if you can rasterize the object to turn it into an ordinary layer and then edit the pixels in Photoshop. If necessary use brute force, meaning create a screen shot of your image.
Message was edited by: station_one
I do not need to maintain edibility in PP, just need to remove the background and bring it back into PP from PS. I duplicated the layer and made a layer mask. However, I'm not sure what you are suggesting I do next. I am using a Mac, I tried the shortcuts you suggested, though it I do not see what it did.