Question: how does Touchstone make her "metalic/liquid" effect on many of her collages?

I am not sure what effect you
mean, although someone has asked me this before :) so I think you mean
something like what is on this one?
http://touchstone.fredfarm.com/images/crash.jpg

This was done by the background image. I used one of my standard images
<which was bright red> used the hue/saturation to change the color and then
put the images one.. using mostly overlay and screen for blend modes. I also
use a set of brushes by Vered <Hazy> and one by myself <Smudged>, in a mask
over the entire collage to give it an all over foggy/smooth/faded feel. By Touchstone.

Question: Blending modes don't do much. Either i can't see the picture at all or the colors get skewed by the background color.

As for blending modes, yes, they do get lost or colorized.. like overlay.. but you can duplicate your layer and use 2 different blend modes.. applying a filter<diffuse glow, filme grain etc> to only one of the layers for a more subtle effect. I use overlay a lot to have the colors of the bg image show through.. then I might use overaly on the next one, or screen..... multiply is good for darkening an image, hardlight for brightening it up a bit... By Touchstone.

Question: any advice on how to get a picture to blend into the background? What if I have more than one layer/picture I'd like to blend into the background? What about using Gradiants?

For blending into background, I start using masking a lot for all my blending. I also use the mode, overlay or screen for letting the underneath layer show. As for the gradiant tool, I have only it once or twice.. I usually use the gradiant map for adding overall color. By Touchstone.