How do I make this kind of shadow?

Question

I know how to put a shadow or outer glow around the document, but I can't figure out how to get those rounded edges. I guess it's not even a shadow, so more specifically, how do I create this rounded outer glow on a rectangular image?

Answer 1

As Matt suggested, adding a shape layer underneath your image would be a good start to create this effect since you can add and manipulate points as you see fit. In addition, adding an inner glow might give you a degree of control over the blur. This should give you the idea:

Answer 2

Another variation to the answer above is draw a circle shape behind your object and apply a dropshadow to that. Still editable but now you don't have to mess with pulling points around.

Answer 3

You can create that type of shadow two ways in Photoshop.

You can use a circle and apply a Gaussian Blur, located under Filter -> Blur -> Gaussian Blur, or you can create a shape underneath the object and apply a blur after using warp which is located under Edit -> Transform -> Warp. If I can find time later in the day I will make some screenshots for you if you need further assistance.