| STEP ONE: Start with two videos of the same
length. | To save space I'm using still
images instead of video, but video works the same way.

Place one of
the videos in VIDEO 1 and the other in VIDEO 2 right above the other one.
Next, RIGHT-CLICK video 2 and select Video Options>
Transparency.

| STEP TWO: Split the
Screen. | You should now have a screen
that looks like this: notice the little red arrows.

The arrows are
pointing to little white boxes in the corners of the sample area.
Adjusting these boxes creates a GARBAGE MATTE.
Move the white
boxes by clicking them and dragging them with the mouse to the location
show below, or whatever fits your needs.
If your second video
doesn't show up you probably need to click on the preview icon(in this
picture its about 2 centimeters underneath and to the left of the bottom
red arrow). It's directly to the right of the little checkerboard icon.

And your final
outcome should look like this
|