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I have that version of photoshop and it just lets me apple or remove effects but doesn’t let me apply layer styles it is grey and unclickable.

Styles’ real name is "layer styles" they can usually only be applied to layers or selections. In other words, you have to have a layer below the one you want to apply the style to. Some of them, like Bevels, can be applied to the whole photo. You’ll also have a hard time applying them to the Background layer. It’s got a little lock on it because it’s the original photo and most people don’t want to mess up the original. First, try duplicating the layer: Layer>New>Layer From Background before working on it. In the Layers Palette, click on the copy (the top one) to highlight it before trying to apply a style to it.

http://www.alibony.com/pse/122208shadow.htm

This little tutorial points out something important: You can apply styles to text, to shapes, to anything sitting on another layer.
http://help.adobe.com/en_US/PhotoshopElements/7.0_Win/WS565072D1-C2EB-4abc-8F7E-9CF37B40AFD5.html

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