To blend the images, you first need to add a Layer Mask by clicking the appropriate icon at the bottom of the Layers palette.

Select the Gradient tool (grouped with the Paint Bucket).

Check that the gradient goes from black to white (remember, with Layer Masks, black hides and white reveals).

Draw a small gradient, just enough to cover the overlapping areas of the two images; redraw if necessary.

Repeat the above for the other image; use the Paintbrush to touch up with black and white paint.