Create a nested comp with a solid in it (you can do this by creating the solid first and precomping it or by creating the comp then dropping it into your current comp). This will be your layer map. Apply Fractal Noise to the layer inside your layer map.
Then apply Displacement Map to the layer you want to distort. Where the plugin allows you to select a layer map, select the nested comp. Finally, specify how much you want pixels to get displaced along the X and Y axes.
You can also displace X and Y independently by adding together red and green tinted fractal noise layers inside your layer map comp. This is a fairly advanced technique, so only try it once you are comfortable with the basics.
As far as fractal noise itself, pay particular attention to the "Evolution" option which, when animated, makes the noise roll around. "Cycle Evolution" lets you force the evolution to return to the same point over a specified period. Complexity controls how much detail you see--if you want soft folling waves, try setting this to 3 or 4. Also note that Noise Type effects how natural the noise looks. Beyond that, it is a very deep plugin, and very powerful. I'd recommend experimenting with it, and reading the extra documentation included in PDF's on the AE CD.
Aaron