Originally Posted by: ics1974I understand how scales and modes are formed but I do not understand how to apply them when improvising over a chord progression.[/quote]
Do you understand how chords are formed from scales? This is the thing you need to do in order to understand how they are related.
[QUOTE=ics1974]
Do you juggle between scales as the background chords change or do you play one scale for the entire song assuming the Key dosn't change?

I did tutorials covering precisely this material.

Scales And Chords Relationships Series 1
http://www.guitartricks.com/tutorial.php?input=426

Using Scales To Connect Chords Exercise 1
http://www.guitartricks.com/tutorial.php?input=427

Using Scales To Connect Chords Exercise 2
http://www.guitartricks.com/tutorial.php?input=428

Then after you do those you can look at applying them to the skill of improvisation:

Introduction To Improvisation In A Major Key
http://www.guitartricks.com/tutorial.php?input=483

Introduction To Improvisation In A Minor Key
http://www.guitartricks.com/tutorial.php?input=491