PS Elements 3 Merging Layer Images

I have PS Elements 3 which I am enjoying. I bought Photoshop Elements for Dummies. In Book 5 Chapter 1 I am attempting to merge two TIF files supplied as examples.As I read the book, it indicates that I should be able to open two files (i.e. The Layers palette will show both file images). I've tried everything and it would appear that only one file image can be opened at a time. Am I missing something? Is this a feature of PS Elements 4 or 5? I can't seem to find out this information. I would appreciate any suggestions.

The Photo Bin is for "storing" images only, and it cannot be used to accomplish what you want; both images have to be open on the desktop. Only one at a time will show as active in the Layer Palette, but don't worry about that for now. Once you've accomplished the move, both will be visible and you can continue with the instructions Pete posted.
Pete D.'s instructions might be a bit confusing for a beginner, though. Ignore for right now his suggestion to drag from the Layer Palette; that method will work, but you're currently stumped at an earlier stage. Try this:
Choose either Tile or Cascade.
Open both images and have them visible on the desktop. Having them side by side would be helpful but not necessary.
Make sure the Layer Palette is open.
Do one of the following:
A. Control>A on the image you want to move, then Copy it. When that's done, put your mouse on the second image and click on it just so it's active and shows in the Layer Palette. Now do a Paste.
or
B. Select the Move tool from the Toolbar. Click on the image you want to move and hold the mouse button down. Drag in onto the second image.

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