Merging layers in Photoshop Elements 8

I'm having trouble merging layers in photoshop elements 8. I have a .psd file that I have used in the past to add a background color, shape template, and restrict the size of images I have posted to my website. In the past I have used photoshop elements 6, and to accomplish what I'm trying to do I selected open-apple - G. This worked in the past, but is not bringing the layers together as expected. I went online and found that I could accomplish this by holding down option and clicking on the line that seperated the two layers, and this worked for me once and I have been unable to repeat it since. Any idea what I'm doing wrong. I'm trying to apply a style to these web photos, and it's simply not working for me. Thanks in advance for any help you may be able to offer.
- William

Looking at your image, you do know you have a layer set/group,which is like a folder in the layer structure? You can't apply a layer style to a folder, which is what you're trying to do in your screenshot.
This gets very confusing because of adobe's switching the names for these things around:
1. You have what used to be called a layer set and is now called a layer group, which is a folder in the layer structure. PSE doesn't natively do these: is this your image with the group created via an add-on, or did someone send it to you this way?
2. What used to be called layer groups are now called clipping masks. That's when you want to do something like crop the visible part of a layer to the shape of the layer beneath it.
It's not really clear where you want the layer style, why you have a layer group, and which layer you want the style on. If you can explain more, it would help.

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