This tutorial was done using Adobe Photoshop 7.0

Open a new window with:
Width:150pixels Height:100pixels
Resolution: 72 pixels/inch Mode:
RGB color Contents:White
Make a new layer.(). Then chose Rounded Rectangular Tool and make a button

shape like at the left.

Next right click on the layer you made and choose blending options. Do as shown below. And click OK.
By now your button should look like this.