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Making a curvy or wavy border out of paper is very easy in Photoshop
CS (these instructions should be very similar in other Photoshop
versions).
First open a new 2400 x 2400 (200 dpi) document. Make the background
transparent by double clicking the "Background" layer
in the layers palatte. Rename the layer (or keep it as "layer
0") and delete the background.
Now select your "Polygonal Lasso" tool from your
tools palatte. It looks like this:

Next draw your wave, don't worry that it's not smooth,
we're going to fix that next. Make sure to draw all the
way around the image area and join the ends.

Now you will have a moving marquee selection that is curved.
But we need to smooth out the curve to remove the choppiness.
Select "Edit in Quick Mask Mode" on your tools palatte
or press "Q" on your keyboard.

This will turn the upper half of your curve pink. That's
the mask.

Next, from the top menu, select "Filter/Noise/Median."
Reduce the size of your preview image so that you can see the
curve. Move the "Radius" slider to 90. This will smooth
out your curve quite nicely. Then click "OK."

Now return to regular editing mode by selecting the "Edit
in Standard Mode" icon on the tools palatte or pressing
"Q" on your keyboard again. This will return your
marquee selection, but now the marquee curve is smooth.
Now you can fill your wavy border with color or paper. Here we've
filled the wave with a striped paper from the La Boheme Add-On
Pack by Rene' Bross and added a drop shadow to the wavy
border. To fill with a paper, open your paper selection, select
all and copy. Then in your curvy border image, go to "Edit/Paste
Into." The paper will fill into the wave perfectly. Now
you can merge down your layers and copy and paste your wavy paper
border into your scrapbook layout.

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