I finally found solutions to my previous problem. I made pooh more cartoon like through the use of a filter. It made him more "bubbly" looking and 3d, solving my problems. It made him blend more with the background and not look so out of place.
I found out how to make him a shadow by magic wand to select all of him and make a drop shadow. Then, i edited the shadow to be less opaque and more natural looking. One of my biggest problem was separating the shadow from pooh. However, after a search online, all I had to do was create a new layer out of his shadow, and voila! i can now move it around.
Then, I adjusted the shadow accordingly.