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Select your image and go to Commands > Creative > Fade Image
> I am trying to fade out a picture like the one on this logo. You can see that
> the picture fades into the red background. I think a gradient is used but i
> cannot seem to get my picture to look like the one on this logo. Can anyone
The image you link to has part of the image fully opaque, then the gradient. To get that effect, you do start with what Alex says. Then, you'll want to play with the gradient handles. Move the square closer to the circle to shorten the gradient region and then move the circle towards the square to move the area affected by the gradient. (That probably won't make any sense until you actually try it, though.)
Just in case your on CS4, the Commands > Creative > Fade Image is replaced with Auto Vector Mask that performs the same function.