The inset effect is very useful and can help add nice
effects to your layout and text. This tutorial covers how to create
inset lines and inset/outset (beveled) text using layers only.
Inset Lines:
1. Open up an image that you would like to apply an inset line(s) to. I
used the image below (made from the
Metal Navigation
tutorial), but you can use your own image if you want.

2.Grab your pencil tool. Set the size to 1 and the color to black. Hold
down shift and draw a straight line that is as long as you need it. In
the layer's palette, set the "Blend Mode" to "Multiply" and the "Fill"
to 50%.
3. Now, duplicate your layer, and change the "Blend Mode" to "Soft
Light" and the "Fill" to 100%. When you have done that, invert the
colors by pushing Ctrl + I on the keyboard, or by going to Image >
Adjustments > Invert.
4. Now, select your Move Tool (V) and push the right arrow on your
keyboard 1 time. If you drew your line horizontally, push the up arrow 1
time instead of the right arrow. You now have an inset line that should
look something like the one below:

Inset Text:
1. Open up an image that you would like to apply inset text to. I am
using the image that is directly above this part of the tutorial, but
you can use your own image if you want.
2. Grab your Type Tool (T) and pick a font that you want to inset into
your image. Set the color to black and the font size to anything that is
going to fit and/or work effectively in your image.
3. Click on your image and type in your text. After you have typed it
in, go to the layers palette and set the "Blend Mode" to "Multiply" and
the "Fill" to 50%. From now on, this layer will be known as "Layer 1"
from here on out.
4. Duplicate Layer 1 (Layer > Duplicate Layer). The layer that is a copy
of Layer 1 will be known as Layer 2 from here on out. In the layers
palette, move Layer 2 below Layer 1 and set the "Blend Mode" for Layer 2
to "Soft Light" and the "Fill" to 100%. Select the text in Layer 2 and
change the color to white.
5. Now that we have both of our text layers ready, it's time to make
them look inset. Grab your Move Tool (V) and push up on the keyboard
1time and push right 1 time as well. You may want to try 2 times each
depending on the size of font or how it looks. It's up to you.
Here is my final image: