Ok, now we will use the retouch tool with the settings below to make him look furry

Start with the head, make the head layer active and use the smudge brush to pull out the edges of the head a little

All the way around the head and under the muzzle

You will need to do this for all the body parts, making the layer active and using the smudge brush to pull the edges out first and then working your way to the inside area... It's hard to explain, but you just have to keep playing around until you get the look you want :o) I also pulled the edges of the nose out a tiny bit too.... Here is mine after I used smudge on all the body parts...

I also used a gaussian blur of 2 on the mouth layer... And thats about it :o)