Larry,
Glad to hear they worked for you. The hardest part is remembering what features 5.0 had.
To blend the layers together the first thing you need to do is overlap the edges of the layers or else you will just be blending them into the background layer. I would use a layer mask for the blending, but I just don’t like the destructive nature of the eraser. If you erase too much and change your mind later you need to import that JPG again.
Here is a tutorial <
http://www.webdesignhelper.co.uk/photoshop_tutorials/photosh op_tutorials/photoshop_tutorial39/photoshop_tutorial39.shtml>. Skip to step 3. You don’t need to use a gradient but if you do for the effect you want keep it close to the edge. Start where you want the image to begin fading and stop just before the edge. If you go beyond the edge with the gradient there will still be a hard edge it will just be less opaque. You can also use the brush tool with a soft brush on the mask, just like Tina suggested with the eraser. The only difference is that with the eraser you have to get it the way you want the first time or undo and try again. With a mask you can keep working using white to make the image opaque, black for transparent and grey for all the shades between all without harming the image.
If you don’t want to mess with layer masks the eraser tool will work fine (Hold down shift to erase in a straight line).
There are several ways to do just about anything you can think of in Photoshop. The key is to find the ones that work best for you. I just thought I would let you know about the other options you have available even if you aren’t ready to use them yet.
We all started out using the most basic features of Photoshop, but once you go back and start editing files again after a few months you tend to wish you had been less destructive with your edit. It can mean the difference between a 2 second change or starting over with the source files again.