When we are designing digital scrapbook elements, we want to add internal shadows to any layers to make them look realistic, however, we don't want those shadows to be on any part of the layer that hangs into open space. This is because the industry standard is to have no drop shadows on the any outside of elements, so the end user can do their own shadowing when they scrapbook. There are a few different methods to do this, but this is my preferred method.
Here is a simple layered flower - it has two layers plus the bead in the center. It's nice enough, but looks really flat. We're going to do what is sometimes referred to as 'internal shadowing' to add dimension and realism.
Our first step is to shadow the top layer and the bead. I use Photoshop CS3, so all my screen shots are from that program. You can probably find the same tools on your version of photoshop in generally the same place. Go to your layers ribbon, select layer style, then drop shadow. Add drop shadows to your preference (note - industry standard for this is to shadow from the top left, but size and spread are up to you)
Now we have nice shadows on bead and the top layer of the flower. The bead shadow is fine, but where the ends of the white flower extend past the red flower, into open space (external shadows), we need to remove those drop shadows. On the right, in your layers palette, you will see 'drop shadow' listed. It doesn't highlight or appear clickable, but if you mouse over it and right click, you will see several options (if you don't see these options your mouse may not be exactly on the shadow layer, try moving it and right clicking again)
The option you want to choose is 'create layer.' This is going to put your shadow on it's own layer.
You will get a warning message - click OK.
Now you can see that your shadow is on it's own layer. It will be called 'Layer X's shadow' (where X is your layer number) or if you named your layer it will be called 'Name's shadow'
Next, highlight the layer containing the item you want to REMAIN shadowed. You do this by holding the control button and clicking on the thumbnail of the image. You will know it is selected when there are marching ants all around the image. (if you have more than one layer that you want to remain shadowed, you can select multiple layers by holding shift+control while you click on the thumbnails)
Go to your select ribbon and choose 'inverse' Now you will have marching ants around the outside of the canvas and the image, indicating that everything OTHER THAN the image is selected.
Keeping the section there, highlight the layer containing the shadow. Press your delete button. This will delete the shadow from the selected area (which is the inverse of the image you selected - hence, shadow is left on the image you wanted shadowed and deleted from everywhere else)
Go back to your select ribbon and chose 'deselect' to get rid of the marching ants.
Now you can merge your layers, and you have a layered element with shadows iternally and no external shadows :) Done!
I'm a PC user and I know there is no control key on Macs - I think the key is command but I'm hoping a Mac user will come and tell me for sure :D