creating buttons in photoshop using layers then bringing into dvd studio pro as psd

creating buttons in photoshop using layers then bringing into dvd studio pro as psd...Is the assignment we were given. I've read it's not the most efficient way but we have to learn to do this first then we'll be shown other better ways to create buttons in DVD studio pro and encore.

Creating layered buttons in photoshop SC5 for use as DVD studio pro.

I've read tutorials on how but each has shown a different way to go about it. What the best way to go about creating layered buttons?

am i supposed to create a project file with a layer for each button state? When I export do I flatten my separate layers? Is background layer a background color for the menu or a background layer a color for the button?