Creating a cool three state rollover button

Start by creating a rounded rectangle using rounded rectangle shape tool.

Duplicate layer. Enable "subtract from shape area" at the top bar. Create two ellipses using elliptical shape tool cutting the rounded rectangle shape from top n bottom.

Double click the layer to open layer style window. Apply settings as shown.
Select the path using direct selectopn tool. Select convert point tool and click on right and left most nodes.
Copy layer style from the above shape layer and paste on rounded rectangle layer.

Type navigation link over the button.

Double click the layer to open layer style window. Apply settings as shown. This will finish our first state of button which is called up.
This will be our second state of button which is called over.
Duplicate the above shown layer. Press Ctrl+T. Scale down a bit. This will be our third state that is called down.
Save the file and switch to Imageready.

 

Create guideline surrounding the button. Select slice tool and create a slice over the button.
Open web content palette if its not already open. Select the button slice in this palette. Right click and select "Add Rollover Sate". This will create a rollover state of the button.
Select the over state in web content window. In layer window hide the rounded rectangle layer and unhide the over shape layer that we created in steps above.
Again select the button slice in this palette. Right click and select "Add Rollover Sate". This will create another state of the button called down.Select this down state in web content window. In layer window hide the rounded rectangle layer and also the over shape layer. Unhide the transformed scaled down button shape layer that we created in steps above.

Now click preview in browser button at the bottom of the tool palette. Press Ctrl+Alt+Shift+S to save an HTML file with all image slices.

Below is the animated output to show how your 3 state button will work on rollover as well as on button press.
 



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