When you say "merge," are you talking about having the second Video appear "over" the first Video, i.e. a PiP (Picture in Picture), or something else?
Also, which version of PrE are you using, and on which OS version, please?
Put the main video on track 1 and the center video on track 2. Use the motion properties (scale and/or position) on the video on track 2 as desired.
I am using Win 7 and Elements 12 to attempt to put video 2 in the middle of video 1 and then delete video 2 and just have the extended
version of video 1 with all of the contents.
I am not 100% sure what you want to do, but I think this may be it.
Given you have a 1 minute video clip on Video 1.
You want to take another clip (0.5 minutes) and place it in the middle of the video clip on Video 1.
The end result would be
Video Clip 1 (0.5 minute), Video Clip 2 (0.5 minute), Video Clip 1 (0.5 minute)
The total duration now is 1.5 minute
Before the insertion the total duration was 1 minute.
Place the Timeline Indicatior where you want to make the insertion.
Then hold down the Alt key of the computer main keyboard as you drag your Video Clip 2 into that spot.
If you hold down the Ctrl key intead of the Alt, you will end up with an overlay (total duration will then remain at 1 minute) and not the insert which will give the total duration of 1.5 minutes).
Please check that out to see if I targeted your question. If not, more details please.