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Is this the effect you are trying to achieve?
1. Open the engine picture and rename the Background layer to anything else. This is necessary for step 4.
2. Draw an ellipse around the engine using the Elliptical Marquee tool.
3. Invert the selection, and feather it. In my example I feathered 50 px.
4. Delete the selection, so that the ellipse is left on transparent background.
5. Copy this to the car picture, creating a new layer. Use the Move tool to reposition and resize the engine. You might want to lower the opacity of the engine layer so that the car shows through.
Thanks Mark! Yes, that's the look. However, I must be missing a step here, about your #3. I can still see the outside "rectangle" of the original photo (on my photo, not yours) after I put it on the car. I chose the feathering (before I used the Elliptical Tool) at 50px , and then tried it at 200px too. What am I doing wrong? (The lower opacity's a nice touch though!) Thanks!
The feathering may be too strong and / or the ellipse is too close to the
edge of the original photo of the engine. In that case the feathering never
quite reaches full transparency. Try to draw the ellipse further in or
reduce the feathering or both. If you still have remnants of the rectangle
showing once the engine is its own layer on top of the car image, use the
Eraser tool with a soft brush and erase it.
Well thanks to you both! I now have this mastered. But made a few mistakes on the way to share with you. My old PhotoSuite 4 did the faded ellipse very simply, while the Adobe Photoshop 5 takes several steps, and to me is backwards. The "old" way, you chose an ellipse, and faded the edges Twords the Center of the ellipse. This "new" way, fades the edges Away from the ellipse. Here's the link:
I maxed out the pixel feathering to 250 (the Left Interior), which makes the original rectangle of the photo visible (as Juergen mentioned), again because it fades Away from the ellipse. Ooops - My fault! Again, this is backwards to me. So 20-30 pixel fade is what I wanted (the right interior). My other mistake was I accidently deleted the picture of my engine, so I used an interior shot instead (my bad!).
But I did Marks first way (#1 of 5), a little different, in specific order; File>Open...>chose a photo>open>feather to 20 pixels>click Elliptical Marquee Tool>made ellipse selection (but did Not rename the Background to something else)>right click Inside Ellipse>Select Inverse>Delete>Right click inside of Ellipse(again)>Select Inverse(again)>Edit>Copy>opened my car photo (my Background)>Edit>Paste>and then placed and sized where I wanted it.
This works, has a white background at the editing stage, but the white doesn't show up on the car. Marks way also works to rename the background (to say Layer 0), it just makes it transparent. The difference is that I right clicked and selected inverse two times. Am I taking too many steps, or did I misunderstand what you said Mark? Either way - Many Thanks Again to you both!!!!!
Looking at it again, I think both our methods were more involved than need be. After you draw the ellipse and feather it, you can simply Edit>Copy and Edit>Paste to the destination photo. No need for a renaming Background or inverting selections. The copy-paste will automatically create the ellipse with the transparent background.