Hm, the boundaries between the torso and leg aren’t as defined as they looked in the screenshot. It’s really a better idea to model continuously on one object, as merging two objects neatly can look very odd, as proven by the difficulty of doing so in this case.
My new suggestion here is to “bridge” the two edges on the bottom of the torso and delete the leg portion. You’ll end up with a hole where the leg should be. Go to the “Border” sub-object of Cylinder01 (in Editable Poly) and select the hole by clicking on one of its boundaries.
Then, click “Cap” in the menu to the right. It’ll fill in the hole. Now you can extrude this polygon to form the thigh, and modify it with edge and vertex manipulation to create the leg down below.