Open your image and use Ctrl D to duplicate it. Close the original.

Optional step: Depending on your image, you might want to use the Quick Color Panel to lighten the image. Click 2-3 times to lighten:

Your image should look somewhat like this, again depending on the image:

Under Selection, make sure Perserve Base Image is checked, then R/C on the image and choose All.

R/C again and choose Convert to Object.

R/C and choose Properties.

In the drop-down menu, choose Inverse of Multiply.

R/C the image and Duplicate.

Go to Photo, Blur, Gaussian Blur.

Change the Radius to 25-30, again depending on the image.

R/C, choose Properties and use Multiply.

You might need to adjust the Transparency, again depending on your image.

Final result:

For the optional last step of the PS tut, open the Layer Manager, R/C on the base image and duplicate. Bring to the Front and adjust the transparency from the Properties menu.