Noobtastic,
In the tool pallet on the left side, click once on the dotted box.
Then go into the image, click once at a corner of what you want to keep, continuously hold the clicker down & drag to the diagonal corner of what you want to keep, let go. Then Edit / Cut, or alternatively press your Control & X keys on your keyboard.
The only reason to do the cutting is to make things easier. That way when you add the extra white space to hold the other picture, you can just add a lot more space than you know you need, so that you don't have to worry about being exact. Then you cut the image out as a fast way to get rid of the white space.
Instead of cutting you could always go back into Image / Attributes & eat away any spare white space by readjusting the image size, but that's harder to fuss with.