I want to add text to my work but i want it to be tranparent withonly a outline around the outside and the insed clear so i can see whats underneath it. Is this possible? I use photoshop 7

Yep. Set your foreground color to the color you'd like for the text outline, and set the background color to null.

where abouts would i find these background colour and so on to do so?

http://www.life.uiuc.edu/edtech/training/ps/workspace/workspace.jpg
See where it says "palettes"? The box to the left of that is the color palette; the top left square is your foreground color, and the one underneath is your background color. If I remember correctly (don't have PS7 on this computer, unfortunately), clicking the "styles" tab will bring up an option to set your colors to null (you will see a white box with a red line through it as your background color when you do it correctly).

okay thanks ill see if i can do it