Open in Photoshop the image that we're going to work on.

Add a new layer by clicking on the Create a new layer icon at the bottom of the layers palette. Rename this layer to Blue Sky by double clicking on its name.

Double click on the foreground color in the tool bar marked with red in this screenshot:

In the Color Picker window that opens you enter the value 7A98CE (light blue) in the area marked with A and click OK:

Select the Paint Bucket Tool in your tool bar (it might be hiding under the Gradient Tool ).
Fill the layer with the current foreground color by clicking inside your document window.

Hide the layer by clicking on the eye icon in front of it .

Make the background layer the active layer by clicking on its thumbnail in the layers palette; a icon will appear in front of it.

Select the Magic Wand Tool in the tool bar.
Use the following settings in the options bar:

Pay special attention to the value of 50 for Tolerance.

Click with the Magic Wand in the area marked with the red circle or click on any other light blue/light green color in the sky:

 

You've now selected a large part of the sky:

 

Go to the menu and select Select / Grow to expand our selection. You probably have to repeat this a few times before the complete sky is selected:

 

Once the sky is selected, click on the thumbnail (A) of the Blue Sky layer and click on the Add layer mask icon (B) at the bottom of your layers palette:

Your original magic wand selection is now converted to the mask.
Alt+click (Option + click on the Mac) on the mask (C) to load your mask in your document window:

Notice that there are two areas in my mask that needed to be corrected (marked by me with a red circle). Of course in your mask their might be more than just these 2 areas.

Press the letter D on your keyboard to set the foreground color to black and the background color to white.
If they're switched, just press X. Just make sure that the bottom of your tool bar looks like this:

Select the Brush Tool in the tool bar.
Click in the option bar on the button marked with red in this screenshot to open the Brush Preset Picker window:

Select a round brush with a Master Diameter of about 30 px. Use a different size if needed. Hardness is not so important, but let's use one of 100%.

Note for PS7 users: the Hardness option in Photoshop 7 can be found by clicking on Brush Tip Shape (top/left corner) in the Brush Palette; a new window will open in which you can change the hardness.

Click on this button again to leave the Brush Picker window and make sure the other settings for the brush in the option bar are like this:

 

Now paint with black over those areas that need to be fixed.
You might need to resize the brush or hardness at one stage. You can do that in the Brush Preset picker window or use any of the following shortcuts:

Shortcut
[	Decrease the size of the brush
]	Increase the size of the brush
Shift + [	Decrease hardness of the brush (softer edge)
Shift + ]	Increase hardness of the brush

When you're done, click on the thumbnail of the Blue Sky layer and set the blending mode of this layer to Hue:

 

The result:

There is one thing I want to mention: after you fix a mask it's always advisable to add a bit of Gaussian Blur (Filter / Blur / Gaussian Blur...) with a Radius value of 0.5-1 pixel to soften the edges of the mask. However, in this example we're going to use the same mask for other layers, so for the moment I've decided to leave out this particular step, you can always do this at the end of this tutorial..