Ahhh, is that what it was supposed to be? Like a picture on fire or something? Gotcha.
There are some commercial plugins that do the fire thing fairly well (the last one I remember using was either eye candy or xenofex, but that was yeaaaaars ago).
I'd suggest just trimming off the parts that are supposed to be missing (the parts that are already "melted", that is) by just selecting and deleting. The pen tool is probably your best bet for getting smooth lines out of your selection on that part. Pen tool is definitely worth learning. I don't have time to go in-depth right now, but there's a lot of good tutorials online about the pen tool. http://www.melissaclifton.com/tutorial-pentool2.html was the first I found in a quick google search.
As for the flames, I found this tutorial for adding flames to text: http://photoshoptechniques.com/texp/fireptk.php
Play around with it, and let me know if you have any questions. I should be back in an hour or two. I'm on AIM & MSN: rootyb423 and rudyb423@hotmail.com, respectively.
Glad I could be of assistance. I've learned a ton from tutorials over the years. It's nice to be able to help someone else out.
Edit: Also, for the record, you should pretty much never "Need" a special plugin or filter for any effect. A plugin might make things EASIER, but should (almost) never be necessary. Photoshop is extremely powerful and versatile out of the box, once you know where to find things. 
When I first started learning, I went through every tutorial I could get my hands on. They're really great for getting the hang of the program in general, and showing you what different functions do, without getting boring, 'cuz you're actually creating something while you learn.
