Hi Stan,
Try this...
1.) Open the picture in photoshop.
2.) Select the ellipse tool and drag your desired oval shape over your picture. This will show a moving dotted line to show you your selection.
3.) Edit -> Copy (or Ctrl+C).
4.) Edit -> Paste (or Ctrl+V).
Once you engage the paste command, Photoshop will take the image from within the selection you made with your ellipse tool and put it on it's on Layer. If your Layers palette isn't open, you may open it using Ctrl+L.
5.) In the layers palette, select the new layer with your oval picture on it by holding the ctrl button on your keyboard, and clicking the small thumbnail picture in the layer. This will engage your "moving ants" selection again.
6.) If you go to Select-> Border. Adjust the size of border you desire.
7.) Select -> Feather. Depending on how much you want it to blur you can adjust the amount of feathering to use.
You could also go to Filter-> Blur to do the same. If you have the "preview" box checked, you can adjust the amount of blur you desire.
HOPE THIS HELPS!