Step 1

Create a new document

Create some text. (I used Planet Kosmos at 50 points)

Ctrl/Cmd+Click on the texts' layer thumbnail to load the selection

Select>Modify>Expand

Enter 5 pixels and click ok

2

The selection should now look like this

3

With the selection still active create a new layer and name it beads

4

Go to the Paths Palette

Click the top right arrow and choose "Make Work Path" from the fly out menu

Enter a setting of 0.5 (The minimum allowed)

Click ok

We have now made a path out of the selection

5

Prepare the brush...

Choose White as your foreground color

Select the Brush tool from the Toolbox

Open the brushes palette

Turn off all the boxes on the left

Choose a 10 Pixel hard brush

Set the spacing to 105% (This will make a dotted line)

6

Click on the Stroke path button as shown

The path will now be stroked with white dots.

Click in the blank area of the paths palette (Below the work path) to turn off the path

7

Go back to the layers palette

You should now have something like this

8

Click the little "f" at the bottom of the layers palette to add a layer style

Choose bevel and emboss and use the settings shown

9

Choose inner shadow and use the shown settings

Click Ok to apply the style.

10

At this point we have a problem. The text is a bit small for the beads (There is a gap showing)

Increase the size of the text to compensate, the edge of the text should line up with the beads

11

Add a layer style to the text. Apply a default drop shadow and a Bevel as shown

12