in order to merge the polygon I go to editor tool and then select merge, however in my case when I want to edit it is giving me this statement" the layers are in a different coordinate system than the current map coordinate system. you can edit data in a different coordinate system than the map" So what can I do so that I can start editing and then activate the merge toolset so that I can merge the polygons. The merge toolset is not active.
I think you have two issues here. The first may be misleading. The warning that you're getting when you start editing is only that--a warning. It means that one or more of the data layers are in a different coordinate reference system than the map's.
You can check what's going on by opening the data frame's property page (one method is to right-click Layers in the table of contents) and select the coordinate systems tab. In the directory tree window, click on layers and you'll the layers listed. Click on each one, and the name of its coordinate system is displayed.
So, the warning is there because any editing you do will be in the data frame's coordinate system, and the results, reprojected into the layer's coordinate system. Generally, it's not a problem, but if you were to use a UTM zone that's a few zones away from the data's, or using some other inappropriate choice to edit in, it can cause distortions in the data.
Now, I am guessing (don't have the software available to check today) that the Merge tool is inactive because of the on-the-fly projection or some other problem. Try changing the data frame's coordinate system to match the layer's coordinate system.