In Photoshop at the bottom of your layers window is a little icon with a lower case f on it which is “Layer Styles” this is the tool you use.
Flatten your image and create a new transparent layer.
Increase the Canvas size of the transparent layer by 15%.
For practice size the canvas to 600 pixels wide and enlarge to 100% on the screen
Now ensure the original flattened layer is above the transparent layer
You will now be working on the Original layer
Now select Layer Styles (the “f” Icon)
And under blending options select Drop shadow
Then play with the selections the clock shows where the shadow lands
And distance spread and speed sliders play with size density and blur.
Play with these and experiment
Duplicate your Background/photo layer (important!). Make it invisible for now.
With the Background color set to white (and assuming none of your photo is white), enlarge the canvas by the amount you want that white part of the border to be. Select All, and choose the Select>Border command, set to about the same number of pixels you want the shadow; save the selection ("Border").
Deselect, and use the Magic Wand tool with the tolerance set to zero to select the entire white border; save as a new selection ("mat")
Enlarge the Canvas some more, bigger than you want the shadow to extend.
Load the "Border" selection, and feather by the number of pixels you want the shadow to extend; repeat for a softer effect. Fill the feathered selection with black, or shadow color of your choice.
Load the "Mat" selection and delete; this should clear the white border, leaving the shadow.
Make the duplicate of the photo visible again. (If you are careful with your selections you can omit this part, but it's a good safety measure!)
Save a Copy (without layers or alpha channels) in TIFF or JPEG.
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Yes, I should be asleep ... but it's "only" 1 am here now ...
Thank you all. But my PS 5.5 does not have either 'f' icon in the layers palette, nor Select>Border command! Bad luck.
But is it really not possible to have shadow border with PS 5.5?
Is a drop-shadow border legal for challenge entries?
Legal for Advanced editing challenges, maybe not for Basic. I don't get the impression that they're particularly popular on entries though; some people like borders, some hate them, and a lot say they don't care.
For the Microsoft Digital Image Pro (suite) folks out there:
It's better to do this on the cropped pic before the resize but here it is on a 640 image
Resize your Image to 620 Format > Resize Image
Lock Screen Res at 72
Scale Longest Side to 620
Resize your Canvas to 640 Format > Resize Canvas > Custom
Choose pxl from units drop > Change your 620 dimension to 640, add 20 to the other dimension
Add a Shadow behind your Image Click your image in the stack
Effects > Edges > Highlighted > Choose Glow Under from choices on the left
Click Customize the edge... button, resize your shadow to fit your canvas
Select white from Click a color on the left (colors on right will be white to black now)
Choose a suitable gray from Click a color slide the Fine-tune the edge width: slider to fit shadow just to edge of canvas (@ 20)
Put a border around your image to give some seperation Common Tasks > Add Shape > choose square
Select the Square in the stack
Right Click on the square choose Change shape or line
Choose Fill color > No Fill
Change line thickness if you desire. (on a 640 image 1 is almost too thick)
Resize your shape to fit just around the edge of your image (between your image and shadow)
Fine tune the shadow If your shadow edge is not quite soft enough
Click your image in the stack
Effects > Edges > Soft (add a click or two to soften edge of shadow)
Play around a bit and you will find the right combo.
ED: Bonus Alternate Method (easier)
Add a shadow Open and select your image in the stack
Effects > Shadow
Select soft from the Select a shadow pane
Done button
Resize the Canvas Format > Resize Canvas > Auto fit canvas to selected object
Put a border around your image to give some separation Common Tasks > Add Shape > choose square
Select the Square in the stack
Right Click on the square in the workspace and choose Change shape or line
Choose Fill color > No Fill
Change line thickness if you desire.
Resize your shape to fit just around the edge of your image (between your image and shadow)
Save for web Save a Copy > For Email or Web > Large Web view