Drag your clip from the "Browser" window to the timeline.
Click on the clip to activate it. Press "Shift" and "L" on the keyboard to unlink the audio and video. You may also click the "Link" icon in the upper right-hand corner of the timeline. Unlinking allows you to treat the audio and video as separate clips.
Hold down the "Option" key on the keyboard, and then drag your video clip to a higher track to create a copy. It is convenient for this clip to reside on a track dedicated to video effects.
Hide your original clip by clicking the "Visibility" icon to the left of the video track. This is a round button with a film frame on it. The track turns gray when visibility is deactivated.
Move the timeline indicator to the first frame of your copied clip, and then click on the clip to select it.
Select "Video Filters" from the "Effects" menu. Choose "Matte" followed by "Mask Shape."
Double-click on the clip to reload it in the "Viewer" window, and then click the "Filters" tab.
Select an option from the "Shape" drop-down box that approximates the shape of the item you wish to mask. Once you make your selection, the clip turns black except for a window in the center of the screen in the shape you selected.
Click the "Center" button. This button looks like a plus sign and changes your mouse cursor into a white crosshair.
Click on the black mask near the object you wish to blur. The mask centers itself on this point, revealing the portion of the clip with the object.
Adjust the size of the mask with the "Horizontal" and "Vertical Scale" sliders until the mask is the exact size of your object.
Select "Video Filters" from the "Effects" menu followed by "Blur" and then "Gaussian Blur."
Click on the "Filters" tab in the "Viewer" window, and then click the arrow next to the "Gaussian Blur" effect to reveal the effect parameters.
Increase the blur radius by dragging the "Radius" slider to the right or by entering a numerical radius into the text box. The higher the radius, the blurrier the object will be.
Click the visibility icon next to the hidden track to reveal your original clip. This results in a composite image where everything is sharp except your blurred object.