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I open image 1
then I drag image 2 so I can combine them.
But then image 2 is completely pixalated.
So then I open image 2 first and its no longer pixilated and drag image 1, image 1 is now pixilated...........................
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What are the pixel sizes of each image and canvas?
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Could you please post screenshots taken at View > 100% with the pertinent Panels (Toolbar, Layers, Options Bar, …) visible?
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Can you show us the examples of what you're trying to do and what the images look like?
It's difficult to try to guess.