It's cool but I think you misunderstood a bit.
You have to make your 800x600 piece, and be able to stick it up against my 800x600 piece, and have them blend seamlessly. You don't get to go in and mess with the edge of mine.
When the worm is displayed, they take each 800x600 image and place them side by side, so ours together would look like this.
I recommend starting with a 1600x600 space, placing mine on the left, locking it so it can't be change, and them working on yours on the right so you can see how it works, then just cut your half out. Make sure it's 800x600 (your image there now is 798x600)
That's what really makes this a challenge, having to blend without touching the other image. Also keep that in mind when you make the right edge of your image, you don't want it too hard but also don't want it too easy.