There are several ways to create outlined text in Photoshop, but most require you to render the text or recreate the outline if the text is changed. Here's a technique that allows the type to remain editable. This technique is for Photoshop 5.5 and earlier.
Difficulty: Easy
Time Required: 2 minutes
Here's How:
- Select the type tool and create your text.
- On the layers palette, right click (Control-click on Mac) and choose Effects from the pop-up menu.
- Apply the Outer Glow effect.
- Set the mode to normal.
- Click the color swatch and choose the outline color.
- Set the Opacity to 100%
- Set the blur as desired. Anything from 2-5 pixels works best.
- Slide the intensity slider all the way to the right (600%).
Tips:
- For a ragged outline, set the Mode to Dissolve and lower the opacity in the Effects dialog.
- For a thicker, more defined outline, you'll get better results with the stroke command instead of layer effects. (see related information below for how-to)

