Thanks for the insight, jwbjerk. I think I've got what I need to make it work now. Thanks as well for dealing with my confusion and taking time to show me how you did it. I'll be sure to credit you if I ever manage to finish this.
The tutorial explains how i make the greyscale elevation information.
However it sounded like you wanted information on the next step: how to turn that elevation information into something that looks cool. That's where lighting effects comes in for me-- number three in this picture.
* The trick is to take your grey scale elevation and copy it into a new channel.
* Make a medium grey layer above all your other layers and set the blend mode to overlay. This is the layer you'll do the lighting effects to.
* Choose the elevation channel you just made as the "texture channel" at the bottom of the lighting effects dialog. Also make sure your light is "Directional". The rest you can tweak as you like.
Thanks for the insight, jwbjerk. I think I've got what I need to make it work now. Thanks as well for dealing with my confusion and taking time to show me how you did it. I'll be sure to credit you if I ever manage to finish this.