Match up your setting up to mine. You can change the Width and Height if you want though.

2. For the sake of this tutorial, I'm going to presume you're going to use my two images. Open up your images.

and

3. Drag the two images over to your document by using the Drag tool so that they overlap.

4. Now, there are many ways to blend. There's the eraser tool, the rectangular marquee, the lasso... But for this tutorial's sake, I'm going to teach you how to blend by using the lasso. Why? Because it's easy and the eraser tool doesn't work all that great.

Okay, click on your Lasso tool and make sure it's either on Lasso or Magnetic. Then define the place you want it to blend in like this:

5. Now, right click-Feather. A window should pop out. Where it says Feather Radius, change it to 15 or 20 pixels. Then click Okay.

6. Now you can press Delete on your keyboard until you're satisfied.

This should be your result.

If you have any questions, please post!