Center this edge effect border over your original sprite 
. Click the Texture Transfer
icon 
then choose the
Snip option. Make sure the larger bounding box has the black handles. Use the Tab key to
toggle them if you need to. Click Apply. It should look like this:
Deselect the images and drag the edge effect border away. Now for the final touch.
With your original sprite selected, click the Effects icon 
and
choose the Drop Shadow effect with the default settings. Click Apply. And there you
have it.
Do the happy dance!