I have seen video files that have been "layered" if you will, and was wondering what software I need in order to do the same. By layering I mean taking a video file and they put a clear block over whatever they are wanting to hide. I know this isn't the best explanation but its all I got. Any help would be great. Thanks.

This is a basic function of almost any editing software nowadays. Any video editing software which allows you to have multiple video tracks will do what you describe here. Adobe Premiere Elements 4 is a good starting point.

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Lloyd

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