2. Create a lasso around the part of the image you want to have for result (You can use Free/Circle/Rectangle lasso).  
 
 

3. Setup the lasso tool setting to 99 Soft edge  

  and press Crop Lasso. 
 
4. If you want your softedged image on another image, don't press Crop Lasso, but 
simply drag it on another opend image like this: