We present a measurement of the microlensing optical depth toward the Galactic Bulge based on 4 years of the OGLE-II survey using Red Clump Giant (RCG). Using 32 events we find tau=2.55_{-0.46}^{+0.57}* 10^{-6} at (l,b)=(1.16, -2.75). Taking into account the measured gradient along the Galactic latitude b, tau = [ (4.48+/- 2.37) + (0.78+/- 0.84)* b]* 10^{-6}, this value is consistent with previous measurements using RCG sources and recent theoretical predictions. We determine the microlensing parameters and select events using a model light curve with the flux blending. We find that ~38% of the OGLE-II events which appear to have RCG sources are actually due to much fainter stars blended with a bright companion. We show explicitly that model fits without blending result in similar tau estimates through partial cancellation of contributions from higher detection efficiency, underestimated time-scales and larger number of selected events. This approach, however, leads to biased time-scale distributions and event rates. Consequently, microlensing studies should carefully consider source confusion effects even for bright stars.
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