I'm sorry to say that Faze was incorrect, and neither of your sprites are good.
The first thing you want to make sure of is that you make sure you select the option that makes white transparent. On the far left of your paint screen, you'll find the toolbar. Just below that you'll see two boxes. Click the bottom one with the picture of colorful rectangles, THEN go about fusing.
Second, make sure you go to Image, then Image Size, and select Pixels in the box that pops up. Put 80 in both the height and width sections. This will help your size problem. Make sure that you save your work as a .PNG file before you upload it as well.
Also, try and make your fusions look slightly more natural; don't just slap together a body and two arms.