At least someone could give you a good answer.....
I do all my own custom graphics and they aren't that hard. You can use ANY image you want as long as you can clean it up. I always use Photoshop but you can use any software you want. You can get a FREE 30 day version of the latest photoshop if you would like to try at Adobe.com.
As far as your image is concerned, like I said you can use any graphic but it is better to find one's that are easy manipulated or don't take a whole lot of work. If it's going to take you forever then you might as well draw it yourself. I find that .jpegs downloaded from the internet at far harder to work on than .png, .gif. or .bmp.....jpeg's have alot of fuzz in them and usually require alot of manual work which you are trying to avoid. The other 3 formats I mentioned are very good for saving the pic just as it looks. Did you know that every time you save a .jpeg it adds more fuzz to the pic!?
I guess you want an answer huh?
Take your pic into your paint program. You should have some kind of background remover tool. Click on all the white spaces to remove said white background. If it don't all come out then you can alter the brightness and contrast temporarily to make all the white uniform so it can be removed. The background remover will only remove one color at a time so if you have a fuzzy .jpeg then you are in for alot of work unless you can balance the color. Once you have done this you can save it as .png or even .bmp. The RPG Maker will take .bmp too since it ultimately convert's everything to .bmp anyways. The .png file is usuallly smaller so stick with it.
Hope this helps....I will more than happy to fix your pic for ya!
peace