Adobe Photoshopt 7 Question

I'm doing a tutorial for something neat but when I duplicate the layer like it says, it's not showing up in the box below the background one. What needs to be done to fix that? I've circled where the duplicate is supposed to be showing up. Thanks for any help.

Go to Layer > Layer from Background

Then do the duplicate layer/new layer thing and you should be able to move it.

Thanks! I was making the duplicate from the one on the screen, instead.

I've got this much done. However, when I flatten all the layers, almost all the effect is lost. Have any solutions?

What do you mean? Like for example you add an outer glow effect, and when you flatten image it's gone?