2.Click on "Expand Widget Templates"
3.Scroll down to where you see <p><data:post.body/></p> .
4.Copy below code and paste it just after the <p><data:post.body/></p> .
<script src="http://ajax.googleapis.com/ajax/libs/jquery/1.3.2/jquery.min.js" type="text/javascript"></script> <script src="http://blogger-related-posts.googlecode.com/files/related-posts-widget-1.0.js" type="text/javascript"></script> <script type="text/javascript"> relatedPostsWidget({ 'containerSelector':'div.post-body' ,'loadingText':'loading...' });</script>
5.Click on "Save Templates" and now you are done.It will look like this.