I still think you need to feather the edges some more. They are just too sharp and it doesn't blend well with the background.
I made this little mini-kinda-tutorial-but-not-really to show Palagrin what I meant by feathering the edges. It might help you understand what I mean by the edges being sharp and why it doesn't blend right.
PART 1 :: Here we have the main image of Gandalf (left) and the blank Sig with a black fill (right)
PART 2 :: As you can see, I have selected the outline of Gandalf (left) that I want to use.
PART 3 :: This is an example of an unfeathered edge (right).
PART 4 :: This is an example of a 10 pixel feathered edge (right).
If you use photoshop, the feather box should be located in the upper left corner. You fill in the amount of pixels you want to be feathered once you have selected the Lasso Tool. If you don't use photoshop, you might want to look for some online tutorials or ask someone you know who has the program you use.