Yep I can help you. I have photoshop 7.0 so I'll tell you how to do it with that.
Getting started:First of all save the pictures that you want to use in your banner on your computer. Open up photoshop (duh) and click "File" -> "Open" and open them all up in photoshop. Now click "File" -> "New". A box will pop up. Give your banner a name and put in the dimensions. An average banner is 700 pixels x 150 pixels.
Resizing pictures:To resize your pictures to fit in the banner click "Image" -> "Image Size..." and adjust the size. MAKE SURE THAT THE PICTURES WILL OVERLAP EACHOTHER. I usually just play around with that until it works.
Getting your pics into your banner: To transfer your picture into the banner select the "marquee tool" in the very top left had corner of your toolbar (it's a dotted square). If your toolbar isn't there than click "window -> "tools" and it wll come oup. Now once that tool is selected, right click on your first image. A menu thing will pop up. Click "select all" . Now go to "edit" -> "copy". Then select your banner and click "edit" -> "paste". Do this for your other picture(s). Now you have all of your pictures in your banner. Once again, make sure they overlap because otherwise blending will not work!
To move around your pictures: Select the tool in the very top right-hand corner of your toolbox. Then click on your picture and move it around to where you want. To move another layer just select the layer in your layer window. The layer window might automatically be there but if not click "Window" -> "layers" and it will pop up. You can also change the order of your layers by clicking and holding down on the layer you want to move in the layer window, and puting it on top or below other layers.
To blend: Select the "marquee tool". Near the top of your window you'll see "Feather: " with a box beside it. You can start with 15 px, some people just use that but I always do 25 px because I tend to get a better blend that way. Simply type "25 px" or "15 px" into the box.
Now click on your banner and a dotted circle or square/circle will appear. Make sure you know which layer you have selected (by looking at your layer window of course). Select the overlapping layer *. Now put your marquee thing near the edge of that picture and press delete on your keyboard. Move your marquee thing around and keep on deleting part of the overlapping layer until your pics are blended the way you want. If you blend a bit too much and hit the "bottom" of your banner just go "edit" -> "step backward" or Ctrl-Alt-Z. A very useful thing. I use it all the time when I srew up.
Other things you can do with your banner: You can change the hue/saturation/brightness/colour balance and so one by going "image" -> "adjustments" and selecting one of the options. This is just to make your pictures match eachother, or if you want an all pink banner or something. If you want your banner to be in grayscale click "image" -> "mode" and select "greyscale". You can also do a whole bunch of crazy things with your pictures with the "filter" menu. I rarely use that stuff but it's there, if you want to blur your pics or add texture or something. I'm sure that there's more that you can do with your pics that I haven't found yet. I find new things every day, so just play around with it and you'll find something you like.
Adding text: Text is really easy. On your toolbar you'll see a " T ". Click on it, click on your banner and you have a textbox. Type whatever phrase you want, and you can change the colour by clicking on the coloured box near the top of your window. Or to make the text more cool-looking right-click on the text layer in your layer window. Then click on blending options and try "inner glow"/"outer shadow" and so on. You can see right away what it looks like on your banner. You can also try the different options in blend mode. Just try everything out and see what happens. And of course you can change your font and size near the top of the window.
So there you go! That's how you make a banner! It's easy once you get the hang of it. And I didn't give you such detailed instructions because I think your stupid lol. I'm sure you could have figured out how to do some of that on your own, but it's there just in case
I hope what I've written makes sense! If you don't get something then pm me or post your question here. I wish I could post little diagram things of the photoshop window to show you more clearly what I'm saying but I don't know how to do that.
Good Luck!!!
EDIT: I see that you found a photoshop tutorial, but this is more detailed anyways (i think). About the blending thing you didn't do anything wrong. It doesn't magically blend the picture it gradually deletes the top layer so that it blends into the bottom layer.
