Photoshop 7 - Superimpose image query

hi i have photoshop 7 and im trying to superimpose one image onto another. nothing fancy requiring perfection, just a straight paste. as a novice, i managed to do this using the lasso tool, but for some reason, after pasting it, the pasted image becomes blurred. the original is sharp. any idea what's causing this?
here's the blurred version in case that helps identify the problem.http://i249.photobucket.com/albums/g...-misc/blur.gif

had to convert image to RGB. its clear now.