I could help myself, I was pretty thorough with this tutorial. So if you knew some of this already, I hope aren't offended.
My version of Photoshop is German, so it could be that I didn't get all the terms right (I used a PS translation page, but they don't have every term). And there should be some differences because you have Elements and I have CS.

( I suck at explaining - hope it's understandable anyway )