This tutorial will allow you to create a dream like quality about the image.1. Select the image you would like to make dreamy. This effect works best with photographs, especially head-shots.
2. Right click on the layer with your image, and select Duplicate Layer.
3. Now you have two layers with the same image. Name the layer ‘blur’.
4. Next blur this layer. Select filter > blur > gaussian blur.
5. The intensity of the blur depends on the size of the image and the effect you desire to create. The blur filter should remove any definite features from the photograph. Select an appropriate radius and click ok.
6. Left click on the blur layer in the layers palette. We are now going to change the blend mode of this layer. This basically defines how the layer will interact with layers below it. There are two ways to do this: Either on the drop down list (on the layer palette) that says "normal", select "Screen". Or right click on the dream layer and select Blending options, then in the window that loads change the blend mode to Screen.