1. Separate the object you want to make the halo around into a new layer. If you are editing a photo, you may have to use quick mask to separate it out from the image and paste it back as a layer.
  2. Make a layer between the background and the object for the flame (Although you might want to move it above the object to make step 3 easier). Use clouds, possibly with difference clouds over them, for the flames.
  3. Use Layer->Add Layer Mask->Hide All. Hold control (or apple) and click on the object layer. Be sure the current layer is the masked flame layer, and then fill the resulting selected shape with white. Trace around the shape with a white brush, adding anything that you think the shape of the halo needs (flames extending on the top, ect.). Then use gaussian blur at a level around five.
A much easier way thats more convincing is detailed in the following steps:

  • Create a circular marquee with the marquee tool.
  • Create a work path from said marquee. It can be in any shape, but circle for halo.
  • Pick the airbrush tool and put the settings to dissolve, size fairly large (depends on the size of your picture but a size 45 brush wouldnt be going to far. Set the opacity down to about 10-20%
  • The color you should choose first should be a dark brown, this is going to be the darkest richest colour in the fire. Once selected, stroke the path with your dissolve brush.
  • I know it may look awful now, but keep going. Pick a smaller brush, a brighter colour and a stronger pressure.
  • Stroke again. Repeat as necessary.
  • Right, now you have an awful looking ring of coloured noise. Grab the smudge tool. Set the fade options fairly high with the opacity at about 50%. The brush should be about half the girth of your noise torus. Stroke up wavily. A lot.
  • Repeat. Change the size. Smudge. Change the size again. One more time, with feeling. Alright now repeat that 5 more times and you're done. Tweak the levels a bit to get a good colour and you should have a fairly convincing halo of flames!

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