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Sure you could do a whole site using just Photoshop, but I'm on a 56K dial-up connection, and I'm afraid it would take 9 years for the site to load. ;)
A lot of designers do their whole initial layout in Photoshop and then cut up the graphics, but if it stays all graphics with no HTML text there wouldn't be any food for search engine spiders to feed on. Take a look at the articles at Search Engine World [searchengineworld.com] to pick up some ideas on promotion. The promotion end of it is best done right through the design process from the start - makes it easier in the long run.
You end up with one .psd file that keeps a big part of the records you need for later site maintenance. It's extremely useful in standardizing a workflow when different people are involved in development over time.
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(edited by: Marcia at 11:44 am (gmt) on Dec. 28, 2001)
No way to tell by looking how someone did it. Best thing is to find step by step tutorials for dicing photoshop graphics [google.com] and just follow along with whichever software you have.
On almost every site I work with, I create a 10x10 GIF in each of the principle colors of the website's color palette. When an image is only one color, you can use the browser to redraw that image to any proportions you need and have consistent color accents for your pages (and their backgrounds).
This also means that you've kept a record of the exact RGB numbers for your site's palette -- just open up the gif in Photoshop and you can read the numbers easily.