Hi Debbie,
I have PSP8 and yes, you can cutout letters. Try this:
1. Create your bottom (or background) layer. This is the layer that you will see once the cutout is done.
2. Create a second layer over the first one.
3. Choose your font. Pick something that's pretty wide (like Arial Black or Cherub). Be sure to experiement with thinner fonts too.
4. Create as "selection" (rather than vector or floating).
5. On your top layer, type and apply your text. Your text should now be "marching ants."
6. Hit delete then apply your cutout shadows: Effects>3D Effects>Cutout. Experiment with how you want your shadow to appear on the bottom layer.
Here are two of my layouts that have cutout letters (both done completely in PSP8):
http://www.scrapbook-bytes.com/galle...cat=500&page=7
http://www.scrapbook-bytes.com/galle...cat=500&page=7
Good luck! (PM me if you have more questions.)
Zee