Start with 2 images.

Step 1

You know the drill by now, make a new document and drag and drop both
images into the document. Create a new layer for the back ground and fill
with white. (I know its black on the pix, but I changed my mind later)

Select the top layer (by clicking on its name in the layers palette)

Click the add layer mask icon in the layers palette to add a mask to
the hands layer.

Step 2

Make sure the mask is selected, you can tell because the icon will show
a square with a circle in it. (See illustration) (CS USERS: They removed
this icon on CS2 The top of the status bar will say mask)

Making black as your foreground color, choose the brush tool and a large
soft brush.

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Step 3

As you begin to paint, notice how the top image dissapears as you paint
it out. On a layer mask, whatever is painted black is made invisible.
Whatever is white is visible.

Step 4

Once we have painted out all the parts we want hidden, you may notice
some areas where you over painted. Don’t worry.

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Step 5

Press the “X” Key to switch the foreground and background colors.
With white as the foreground, choose a smaller brush and paint back the
areas you want to keep. Notice as you paint with white, the image comes
back. Don’t you love layer masks!

Step 6

Now are you ready to take the next step? Duplicate layer 1 (The cog),
by selecting the layer and layer>duplicate or by simply dragging the
layer name to the new layers icon.

Drag the new layer to the top of the layers palette as seen in the picture.

Keeping the top layer selected, Ctrl/Cmd+click on the layer 4 thumbnail
(The tiny picture of the hands in the layers palette)

Step 7

A - You should see the “marching ants” selection like
this

B – Click add layer mask and the selection will automatically
fill the mask. Click the mask thumbnail to select the Layer Mask.

C - Invert the mask by pressing Ctrl/Cmd+I or image>invert.
You will now see the hands again.

Step 8

We are going to paint back some of the cog. But to see it clearly we
will lower the opacity of the hands layer (layer 4) Select the layer and
slide the opacity to 58%.

Step 9

Select the top layer again. Just like before, with the layer mask active
and a white brush, paint the edges of the cog to make then visible.

It will help to use a smaller hard brush for the detail in the teeth
of the cog. Use a large soft brush going into the hands for a smoother
transition.

Step 10

Put the opacity at 100% again on layer 4 (the hands layer) There we have
an interesting blend of images.

Are you ready to take it even futher? Lets go…

Step 11

Go to hue/Saturation and colorize the hands with a warm color and very
little color saturation, 30% at most.

Pull back the opacity on all the layers to 70 – 80%

Click on the “hands layer” thumbnail to select it. then directly
to the left of the other thumbnails, click the box and see the little
“chain” icon appear. This means the layers are linked. Link
the 3 layers together, do not link the color background layer. Go to Layers>Merge
linked.(CS2 Users: Hold Down Cmd/Ctl and click each layer to select it.
Choose Merge Layers From The Palette Options Menu)

You now have only 2 layers. The composite layer with our art and the
white background layer, let’s do something cool and fun…

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Step 12

Select the white layer “layer 3″

With the retangular marquee tool “M” draw a smaller rectange
inside the picture frame and fill with black. Should look like at the
left.

Step 13

Select the top layer and make another rectangle larger than the last
one

Invert the selection by pressing Ctrl+Shift+I or Mac
Cmd+Shift+I

Select>feather input about a 10 pixel feather

Step 14

Press delete 3 times and this is what we have.