Create door with simple rectangle. Panels created with more rectangles, inside bevel & emboss. Then distort.
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Create porch shadows with several layers to (hopefully) get the shadows right.
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Warp the roof with puppet warp to fit and then distort.
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Color overlay the masked elf. Copied extra body pieces to change poses
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Window elf required layering the lower part of the window over the li'l elf
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Slight Gaussian blur added to all elves to blend
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Hue and saturation adjusted on elves to blend with boot
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Grass painted in over shoe to blend with scene
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Sparkle created with very narrow and wide selection tool on separate layer, filled with white. Motion blur added. Layer copied 3 times and rotated to create star effect. Inside rectangles made 50% smaller and Gaussian blue applied. Layers were then flattened and put into scene.
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"Glow" added on separate layer under sparkle, using low opacity soft brush and white paint. A little white also painted onto elves.
To finish and blend, ran the blur tool on low opacity along all cut edges
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Added shadow from trees to porch stairs and li'l elf.
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Duplicate main layer, and set to screen.
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Add medium amount of Gaussian blur
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Duplicate that Gaussian blur layer and set blending mode to Overlay. Turned opacity down to 80%.
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Group the 2 effects layers.
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Select the "Group" layer and choose Layer -> Layer Mask -> Reveal All.
(Note: If the layers themselves are selected, "Reveal Al" will gray out and not work. Select only the "Group" layer.)
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Now click Image -> Apply Image.
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In the pop-up, reduce opacity to 50%, leave other default settings. Screen shot shows the settings.