If the larger photo is In Line With Text, make the smaller one In Front of
Text. Or they can both be wrapped, with one layered in front of the other.
Or the small one inline and the larger Behind Text.
Try this: right click on the picture you inserted and format select "format
picture". On the layout tab, select "Tight" or "Through". Then insert another
picture, follow the same procedure then drag it anywhere on the larger
picture. I hope it appeared the way you wanted it to be.