Help with Exposure and Histograms

I am trying to learn how to get the correct exposure using external flash (430exII) on my Canon T1 camera. I have attached a picture that I recently took that I would like to correct the exposure for in Photoshop. Is there anyway to salvage this photograph and make the exposure correct without washing out the baby? I know my first mistake was taking this picture at the incorrect exposure (underexposed). Maybe my flash was too bright as well because when I try to correct the exposure using Levels in Photoshop, it washes the baby out. I need a crisp black background and perfect exposure on the baby. Is this possible? Also, this baby has REALLY blue eyes. I notice when I use my flash, the eyes almost look more grey then blue. Any advice is greatly appreciated. I want to be perfect at this some day! Thank you for your help!

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You need to master the Selection tools in Photoshop so that your Levels adjustments alter only the background and not the subject. The example image is too small to do much with, but here's a quick example showing the use of a mask to protect the subject so the background could be darkened.

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I am kind of familiar with masking. But, I always run into a problem around the hair lines. After I darken the background, my subjects hair looks unnatural. What do you use to darken the background? Do you paint it in black or adjust lightness and darkness?

I used a channel mask to select the baby, then a Curves adjustment layer to darken the background. I could have also used a Levels adjustment or a Hue/Saturation adjustment layer; anything that alters the luminosity. The key is getting a precise selection; hair isn't the easiest thing to select. Tools like the Quick Selection and Lasso tools will not work since they don't have enough precision.

There are many excellent masking tutorials on the net. Here's one I like - http://www.planetphoto​shop.com/masking-with-channels-2.html

Just select baby, feather 1px, curves layer, move lower rt slider left to the start of pixel data, sharpen 77%
Your bg looks good to me.

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