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This tutorial was written for PSP 7, but it's nothing that can't be accomplished in version 6 with some minor adjustments (and perhaps even version 5). This is an intermediate level tutorial, requiring familiarity with using Selections, Gradients, and the Layers Palette. It requires no plugins.
If you'd like to use the Gradient I used in the example, feel free to download and unzip it into your PSP Gradients folder.

Tutorial

Create a new 300 X 300 image on a white bg with 16 million colors and 72 pixel resolution.

Add a new Raster Layer (Layers | Add New Raster Layer)
Name this layer Gradient

Select the Text Tool and click anywhere on the the canvas
Type in your text according to the following settings:

Name: Bold text works best (I used Lucida Handwriting - 72 pt., bold)
Script: Western
Size: 48-72 (depending on the length of your word/phrase)
Kerning: 0
Leading: 0
Auto Kern: Unchecked
Styles: Stroke = Null (Crossed out circle)
Fill = any color (it will be deleted, so it doesn't matter what color you choose now)
Textures: Stroke = Null
Fill = Null
Create As: Floating & Antialias Selected

Click OK

Click and drag the text to the *approximate* center of the canvas
**This ensures that there is enough space surrounding the letters for the next step.

Save the Selection to the alpha channel (Selections | Save to alpha channel)
Click OK twice
Hit the Delete Key to get rid of the color and the selection

Load the Selection from the Alpha Channel (Selections | Load from alpha channel)
Expand the selection by 5 (Selections | Modify | Expand = 5 pixels)
Feather the selection by 20 (Selections | Modify | Feather = 20 pixels)
Flood Fill the selection with your favorite Linear Gradient:
Angle = 135
Repeats = 0
Inverted = unchecked

Deselect (Selections | Select None)

Add a new Raster Layer named Text
Load the Selection from the alpha channel (Selections | Load from Alpha Channel)
Flood Fill the selection using the same gradient and settings as before (make sure every letter is filled)

Do not deselect

Add a new Raster Layer named Cutout
Apply the Cutout Effect (Effects | 3D Effects | Cutout) with the following settings:
Offset: Vertical = 2
Horizontal = 2
Attributes: Opacity = 60
Blur = 5
Color: Shadow Color = Black
Fill with interior color UNchecked
Click OK

Lower the Opacity of the layer to around 60% in the Layers Palette.

Resizing the Image (Optional):
(Image | Resize):
Check "Percentage of original" and enter 70
Resize type: Smart Size
Resize all layers = checked
Maintain aspect ratio of: 1.0000 to 1

Crop to desired size and you're done.

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Page Modified: Feb 13, 2001