The Pen tool is something use to create a path which can be used for some things, including creating lines, shapes, or selections.
To create a path with the Pen tool, just... er... click the Pen tool (see attached picture) first (or press P, which is the shortcut) and for easiness' sake select Rubber Band (see attached picture - click the black triangle in the toolbar shown)... and also select Auto Add/Delete.
Make sure Paths is turned on, NOT Shape Layer or Fill Pixels (go mess around with that on your own). (see picture)
One ting about paths is that they'll always be visible - though only as part of a .psd. They're not REAL THINGS - they're just information. They will never appear on your final product, but on a .psd if you want to hide them so that you can see your product as a .psd without the paths - press ctrl + h. Or go to View > Show and select whatever it is... press ctrl + h again to unhide it.
Essentially, a path is a line. So to just make one straight line path, click once (where you want to start) and then click again at the other point where you want your line to be. Whee. Straight line. Finished your wonderful two-point line? Press Ctrl and click outside of the line. (Your cursor should have changed to a white arrow pointer.) You will now see your path without the points. To see the points again just press click Ctrl and click on the line. DO NOT just click on the line. You'll create a new path.
follow the curve
Of course, your drawing outlines are not consisted of straight lines, so you do this: click when you come to a point where the line curves. Look at the example - the boxed up area. Each little square point is made when you clicked, and the line in between will appear also because of the rubber band thing. (Try it and you'll se what I mean.) When I mean click along the curve, see the boxed up area - it goes vaguely along the curved line.
When you've finished going along your curve, press control (cmd for macs) and click outside of hte line. You have your basic path.
After you've put some points along the curvy line sketch or whatever, then PRESS ALT (or the mac equivalent - what's the mac equivalent? Um.... command, I think) and hover over point you want the lines on either side of it to curve. You should have a pointy cursor now. (I couldn't put it in the attached picture...)
Now click on the point and drag! You should get curves now... (Note: you cannot do this on points that are at the very end of the line.)
You would see now your point has sprouted two handles. (see attached picture) These handles control the curve of the line. You can move each handle individually by clicking on the black box at the end of each handle, or you can control both at a time (to get a smooth curve) by doing what you just did earlier (click on the main point and drag when pressing alt at the same time.)
You can change your curve so that it fits your sketch (see the attached picture bottom part to see what I mean) and after meddlin' around with it, you get your smooth curve PATH.
Note: It takes a lot of time to get used to it. Trust me, messing around with it helps a lot. Simply reading this does not help at all. To get a real smooth path outline takes some practice alright.
To create another path, ctrl + click outside your active path and it should not have any more boxese on it. (When it's like that, it's an inactive path.) Then just click on where you want to start again.
If you have too many paths, you can avoid cluttering up your workspace with paths and put certain paths on a different "path layer" (not a layer, a path layer). To see this, in your layers pallete there should be a tab that says "Paths". (See attached picture). When you go to one layer, you do not see the paths in the other layer. It is helpful (sometimes).
Do not worry if you think you've made too many or too few points: you can always delete points or add new ones along the line without changing tools if you have Auto Add/Delete on.
Just hover over a point you want to delete and click when there is a minus sign next to the pen cursor; or just go along any unoccupied area of the line which you want to add a point to and click when you see a plus sign next to the pen cursor.
continuing where you left off
If you want to add a point CONTINUING from the line (not ALONG the line), just click on the point at the very end of the line. (If you hover over it, your cursor shuld be a pen with a box and two lines on either side of it) It should let you continue your line. As usual, if you cliekd it by accident, ctrl + click outside hte line...
making closed paths
Making closed paths means you have made a shape. Technically it means the last point that you click should be back on the first point - so you just make the weird shape you want, and then end off by clicking on the original point. If you are working on an active path and are about to end, when you hover over the original point you should have a pen cursor with a small circle next to it.
Shapes in photoshop (Like the custom shapes, rectangles, boxes, etc. - its under the text button in Photoshop 7) are also made using closed paths. You can save your closed path as a shape by going to edit > Define custom shape. Next time it should be in your list when you look through Custom SHapes.
doing things with your paths - note: you cannot do any of these except the last if your path is hidden
FILL [closed paths]:
You can fill your closed path by going to the Paths pallete and clicking this round circle at the bottom that is filled. Note: On open paths (lines) it will "close" it for you - so don't really do this
OUTLINE [closed & open paths]:
Create an outline by clicking the 2nd circle at the bottom of the Paths Palette - the one that is not filled. You don't need to be using the Pen tool to do this - just select the path you want outlined (See other section on selecting whole paths) and it will either STROKE THE PATH with a 1px black pencil if you are still in the pen tool, or it will stroke it with the ACTIVE brush (just click on the brush button - your path should not deactivate.), with all its settings nad everything. You can make it stroke with just about *any* of the brush tools - Brush, History Brush, Pencil, Eraser, Background Eraser Pattern Stamp Tool (BUT NOT CLONE STAMP), Smudge, Blur, Sharpen, Dodge, Burn and Desaturate/Saturate if I'm not wrong.
Remember you have to select the tool you want and THEN click the button. Try something cool: You can get it to also have the Size, Angle, Roundness, Scatter, Count, Foreground/Background, Opacity and Flow jitters to act along the line AS LONG as you set the Control to FADE. Mess around with this...
SELECTION [closed path]: You can convert your path into a selection by clicking the third circle at the bottom of the Paths palette. Its a dotted circle.
CONVERTING SELECTION TO PATH [selections only!]: When you have a selection, go to the Paths Palette and click the 4th button at the bottom of the palette.
moving paths or editing entire paths
You can slightly change line segments by ctrl + clicking on the line segment and dragging it.
You can of course still move your individual points around by ctrl + clicking them and moving.
You can move entire paths if you press ctrl + alt while in the Pen function, OR you can select the Path Selection Tool in the pallette (the button is just aboeve the pen tool - the white one is the direct selection tool which you can get by just pressing ctrl. The black one is the one you want here) OR you can press A (the shortcut). With the Path Selection TOol, it only selects whole paths. When it selects a whole path, all the points' boxes will be filled in (like active points)
You can edit whole paths by using Free Transform as you would for a selection. Do this by either going to Edit > Free Transform Path/Transform Path, or if you've selected teh whole path and in the Path Selection TOol toolbar you have "Show Bounding Box" checked, you can edit using the bounding box handles.
Using paths in a drawing means you have your sketch layer, then on a new layer you would draw a path on the sketch, and make sure it's final and then click the Stroke Path button, it would stroke the path on the ACTIVE LAYER (not path layer, LAYER!!) - so make sure you're on a blank one because once you've made it a stroked path, you cannot edit the STROKED path. (You can still edit the non-material path - just not the proper outline. Comprende?)
If you realise you've made a mistake on your stroked path, you can:
erase off the mistake and try drawing it in yourself (good luck though, it usually screws the drawing up)
if it's just adding on, make a NEW path and stroke it on the same layer, it's just as good usually
delete your stroked path layer and edit the original path, and then re-stroke it (easiest*)
*Note: If you want to have inconsistencies in line thickness (which is good but the Path tool can't really do that) and you MANUALLY thickened or thinned some parts of the outline, then this option is actually not so good - because you'll have to RE-thicken/thin the outline when you re-stroke it.
Final small I almost forgot to write note: There is another option (on hte picture) called Freeform path - you can draw paths straigh on with it, but it's obviously not going to be nearly as smooth as the usual Path way, unless you're... really good.
That's just about it I suppose... the attached picture should help you some. You can obviously see what is the path - note, the purple line is NOT the stroked path, I didn't stroke hte path. THe purple thing is the "sketch". No, and not the BARNEY purple thing...
Sorry if it's messy and rather big.... eh...
Thisi s of course not the best guide, I just tossed it all together with little thought towards understandability or organization. ;x Try searching on google for "tutorial", "paths" and "Photoshop", you might get some good tutorials...