Icon Tutorial #001

For the hell of it I'm going to post an icon tutorial, which is coincidentally my first one. Even though I have all the steps written down when I first created this icon, I still might screw up somewhere so please bear with me. ^^;

In this tutorial we'll be going from this image to this:

This tutorial is for Photoshop 7.0. I'm not familiar with other photoshopping programs so this may or may not be easily translatable.

Onward to my first icon tutorial! :D