If you want to make the text appear like it's a watermark, where the text is more faded, you have to do is go to the layer palette and adjust the opacity for the text. Use the sliding arrow to do this.
But note: you can't merge all or flatten the layers when doing this. After you've acheived what you like, then merge/flatten the layers. Here's an example of what it can look like depending on the opcaity adjustment.
Transparent Text
Awards Won!
Favorite Actors & Actresses
Link Me! :)
Clubs I'm A Part Of
My Crushes
Friends
Fun Stuff For The Visitor!
Links
Favorite Movies
Favorite Music
Fanlistings
First, open a blank image or the image of your choice. Add a layer by going to LAYERS>NEW RASTER LAYER. Your inputs should say:

Name: (name your layer)
Blend Mode: Normal
Opacity: 100
Group: 0
Layer is visible: checked
Mask is enabled for this layer: checked
Mask is locked with this layer: checked
Now click OK.

Now go to the text button. Type in the text of your choice. Click OK. Position the text where you want it to be. Now go up to SELECTIONS>MODIFY>EXPAND.
Set the number of pixels to 1.
Click OK.
Now flood fill the text with a color of your choice. Now go back to the text button and type in the same text as you did before. Click OK.
Position that text in the flood filled text so that it looks even. Now leave that text selected. Go to the LAYER PALETTE. You should see a little picture of a trash can. It's to the right of the picture of two white boxes in the top left corner of the layer palette. Click on the trash can. Hit YES when it asks you if you want to delete the current layer. Still keep that text selected.
No go up to EFFECTS>3D EFFECTS>DROP SHADOW.
Your properties should say the following:
Vertical: 1
Horizontal: 1
Opacity: 100
Blur: 2.4
Color: Black

Hit OK. The text should still be selected.
Now click on the CUT button. It looks like a pair of scissors. You should now see your text cut out. Right click on your image to deselect the text. Go up to LAYERS>MERGE>MERGE ALL/FLATTEN. Here's my example below.
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