[IMAGE 1]
Open the other image you want to include, and save as a PSD too (so any changes you make won’t affect the original image).
Using the lasso tool and DELETE button remove most of the background from teh picture, then enlarge the picture (CMD/CTRL +) to about 400%. Using the ERASER tool in brush mode very carefully remove all remaining traces of the background.
When you are happy with te result either copy/paste as above into IMAGE 1 (or you can drag and drop directly from one PSD to the other with the Move tool.)
Save and close IMAGE 1 and focus on IMAGE 0.

You should now have 3 layers. Select which layer has the second image and using the move tool place it where you want it to be. If it is too large /small you can resize it using SCALE from the EDIT/TRANSFORM menu.

Fiddle about a bit until you get it as you want it then go to the FILE menu and SAVE the new picture.

There are lots of fine tweaks you can do to improve much further but it is beyond the scope of this question/answer. PhotoShop can slide images in front/behind others, distort and alter them in many ways, move them to new universes, in fact … if you can imagine it PhotoShop can do it.

However PhotoShop is a professional’s programme and not for the faint hearted. It took me several years of playing around with it to become what I would consider to be "competent". Having said that, once you get the idea and flexibility of working in layers you are half way there …

There are many online tutorials on PhotoShop, downloadable podcasts from iTunes, purchasable DVD courses, courses at your local college …

It may be too late for what you want to do now, but learning to use PhotoShop is well worth doing. The more you learn the more you realise how amazing and useful this programme is.
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