Now that you have a magnifying glass image saved and ready to go, let's take a look at the photo you want to magnify. We'll want two copies of the photo; a low resolution version and a high resolution one. The low res photo is the one that will form the basis of our picture, and we'll put a detail from the high resolution photo inside the magnifying glass lens.
Open your photo in Photoshop Elements (or your favorite photo editor). I'll assume this photo is a high resolution original, and therefore has a lot of pixels in it. Choose Image, Resize, Image Size and enter a smaller value in the Width. In this example, I'm resizing it down to 1000 pixels across. Click OK. Then save this smaller photo, so you have both handy.
Launch Photoshop Elements and open the smaller version of the photo. Next, open the magnifying glass image in Photoshop Elements as well. You should see them both in the Project Bin at the bottom of the screen. If it's not currently the selected photo, double-click the magnifying glass. Select it by pressing Ctrl-A and then Ctrl-C. Now double-click the other photo in the Project Bin and choose Edit, Paste. You should see the magnifying glass appear as a new layer in your photo.