Help! Feather or Fade Image Edges

I am working with a rectangular photo image and want to fade all edges. I have tried the Vignette tool in CorelDraw X4 and the Feather tool in PhotoPaint. The image overlays another graphic (not a solid color) and I want it to cleanly fade over this layer. The end result of both attempts appears to be beveled or contoured instead of flat. 

How do I correct this undesired result?

Thank you.