Photoshop Tutorials: Making Your Subject Pop Out Of A Photo
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Step 9: Merge The Top Two Layers In The Layers Palette
Since "Layer 1" is already selected, hold down your Shift key and click on the top layer in the Layers palette to select it as well. You should now have both layers selected at once:

Use the keyboard shortcut Ctrl+E (Win) / Command+E (Mac) to merge both layers together so the smaller photo and the object(s) above it end up on the same layer. You'll now have just one layer instead of two:

Notice that your Stroke is no longer a separate layer style. It's now simply part of the image.
Step 10: Add A Drop Shadow To Complete The Effect
We're almost done. We're just going to add a drop shadow to finish things off. With the newly merged layer selected, click on the Layer Styles icon once again at the bottom of the Layers palette and this time, select Drop Shadow from the list:

This brings the Layer Style dialog box back up, this time set to the "Drop Shadow" options:

I find the default Opacity value of 75% is a bit too strong, so I've lowered mine to 60%. Set your Angle to 120°, Distance to 5 pixels, and finally, increase the Size of the drop shadow effect to 10 pixels. Click OK to exit out of the Layer Style dialog box, and you're done!
Here's the original photo once again for comparison:

And here, after applying the drop shadow, is the final "popping out of a photo" result:

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